Geopolitical turmoil, international conflict, and the president-elect's “America First” policy are upending the trade landscape for U.S. companies, forcing CFOs to question their assumptions about “the way the world works, the way America works, pretty much everything.” I will have no choice but to have it.
Beth Sanner, who served as assistant director of national intelligence during President-elect Donald Trump's first term, said: Sanner delivered the keynote speech Monday at StrategicCFO360's CFO Leadership Awards event in Midtown New York.
Amid ongoing unrest around the world, including recent conflicts in Syria and South Korea, Sanah told the audience, “We are in the midst of great change. Technological change, political change, geopolitical change. scientific changes and,'' Sanner said. “The worst thing we can do is stay here and think things are the same.”
In a speech that highlighted a range of conflicts that have significant implications for U.S. economic interests and the supply chains of U.S. companies, Mr. He worked on everything from millions of dollars being lost. China's move to break away from dependence on US trade.
Export controls, tariffs, and retaliation
Sanner, currently director of geopolitics and strategy at consulting firm International Capital Strategies, believes that in order to proactively predict the policy outcomes of the second Trump administration, CFOs must also consider their assumptions about President-elect Trump. He suggested that we should have doubts.
For example, Sanner, who has met with President Trump more than 100 times, said that Trump's “America First” policy is “not reckless. It's what he thinks.” One core is the belief that the rest of the world is trying to take advantage of the United States, whether it's China stealing the intellectual property of American companies or European countries not paying enough for America's defense. Regardless, he said. The Western Alliance, or the flow of illegal immigration across the Mexican border.
This philosophy will form the basis of much of President Trump's foreign and economic policy. Regarding international trade, Sanner said President Trump will use heavy tariffs to protect the competitiveness of U.S. industry and the nation's security interests. “President Trump said tariffs are a powerful tool to achieve more than just economics,” Sanner said.
But as President Trump prepares to accelerate the trade war he started six years ago by imposing 60% tariffs on Chinese goods, Sanner said China is preparing to retaliate. China's leaders are [becoming] Historically dominant, it has become economically independent by reducing its dependence on the United States and other countries. “However, China has a structural problem because domestic consumption accounts for only half of GDP and the Chinese economy is currently dependent on exporting excess capacity,” Sanner said.
The prospect of President Trump terminating an agreement with China to increase purchases of American products is not good. “Structurally, it's a problem for China,” Sanner said. [And] “Financially it's not possible. It's not good for them to commit to it and they don't want to do it because it makes them dependent.” Result? Possibility of a full-scale trade war with the US
Export controls, another trade tool, are about U.S. competitiveness and protecting the high-end technology built by American companies, Sanner said. The Biden administration's controls will be continued by President-elect Trump to protect the competitive advantages and intellectual property of U.S. companies. But Sanner expects President Trump will likely further restrict exports of AI and cloud technology. She expects the Trump administration will also crack down on licensing violations in China, since intellectual property theft poses grave economic and security risks to the United States.
Supply chain dependencies
All of the above impact U.S. companies whether or not they do business directly in China. Sanner asked CFOs to identify where there are country-specific dependencies in the supply chain, particularly with China, and prepare to find another supplier or renegotiate supply contracts. advised to do so. “I think there are a lot of people who are already increasing their purchases to create a buffer, but not everyone has the cash flow to do that,” Sanner said.
When tariffs and retaliation disrupt some small businesses' supply chains overnight, as happened during the first Trump administration, small businesses may be the ones most affected. While some export controls and tariff agreements may have significant carve-outs, Trump said small businesses didn't have anyone in-house to help them apply for exemptions from U.S. trade regulators. struggled to lobby for exemption during his first term. said Sanner.
Sanner recommended that these companies immediately contact their local trade associations and national organizations, such as the U.S. Chamber of Commerce, to request assistance in navigating the upcoming trade dispute. “Ask your association, 'How can you help us?'” She added, “Start understanding these things and get to the front of the line. Why? , because you raised your hand early,” he added.
Regarding President Trump, Sanner said: [he] You will get some good things out of his very aggressive behavior. And some people may not like the way he does it. Although unpleasant, it can sometimes yield results. ”
Other geopolitical risks Sanner disclosed, both in the pre-event interview and at the Leadership Award, included:
market volatility. “Part of how the next administration will address these.” [trade] Solving the problem requires keeping China on the back foot, and that means trying to be unpredictable in a way. If China is surprised and continues to be on the back foot, the market could also suffer a bit. ”
About the Russia-Ukraine war. “I think it's becoming clear that the main problem here is actually the Russians.” [trying to end] this. …At least for now, President Putin has no intention of giving up an inch. That won't happen [solved] In one day. ”
About the Houthis and the disruption to western sea routess. “We need to finish this Red Sea mission because we are spending more of the very missiles we need for Asia and to protect Israel from Iran.”
Possible tariffs on European trade. “Having met with several diplomats recently, I can tell you that the EU is scared and is trying to get a deal. That's exactly what President Trump wants.”
About the Middle East. “Trump talked about the Abraham Accords and how they are key to security and stability in the region. Now, the world has changed a lot in the last four years. Saudi Arabia wants different things, but they One of the things that they don't want is this. They don't want Palestinians living in Gaza to be under Israeli control, and they don't want Israeli settlements in Gaza.”
Regarding relations with Mexico: “Mexico has a high U.S. content in imports from Mexico to the U.S., and vice versa. The U.S.-Mexico-Canada Agreement is scheduled to be renewed in 2026, but that won't be easy. President Trump's threat to impose 25% tariffs on all Mexican imports unless the “onslaught of criminals and drugs'' is stopped is aimed at putting pressure on Mexico and will likely not be implemented. .”
