Let’s Make a Deal! Exploring the Opportunity of Tariffs

On the campaign trail and since taking office, President Trump’s tariff proposals have sparked debate and angst across industries and geographies.  Many American companies and their trade associations loudly oppose what they see to be the devastating economic impact from the burden of higher costs, real risk of retaliation, and further global supply chain disruption.  Today, the first tranche of these tariffs are hitting the markets:  25 percent on all goods coming from Canada and Mexico, and an additional 10 percent on all goods coming from China.

As a seasoned trade professional, who generally believes that free trade strengthens economies, I’ll admit to being taken aback by the degree to which tariffs are being wielded as a trade and foreign policy tool.  But companies should not let concerns about tariffs blind them to potential opportunities.  The early examples of Colombia, Canada, and Mexico - where the White House suspended (in the case of Colombia) and postponed (in the case of Canada and Mexico) its proposed tariffs following concessions by these countries’ governments - make one thing clear:  The Trump administration is ready to make some deals.  

The Challenge and the Opportunity

One thing is for sure, tariffs are here, and more are likely coming.  Corporate America needs to get ready.  Yes, business strategists should continue looking to further diversify supply chains, shift production into the United States, and adjust their financial forecasts and accounting procedures.

But the U.S. business community should also consider what it might want in any deal.  The time to be heard is now.  Use this opening in the debate on trade to engage with U.S. trade negotiators on what they should be demanding from other nations in exchange for lifting any tariffs.  The Trump administration’s muscular approach to global trade creates a golden opportunity to finally address long-standing trade restrictions shouldered by American companies, particularly in the competitive sectors of energy, agriculture, healthcare products, and semiconductors.

In addition to tariffs, many countries enforce protectionist policies solely to restrict fair global competition, imposing artificial price controls, unfair subsidies, discriminatory regulatory procedures, and uneven legal protection, among other issues.  American companies are leaders in innovation and efficiency.  In my 20 years of working with U.S. high-tech firms to expand market access overseas, I have never met a company representative who was afraid of competition.  What they feared were sizable obstacles imposed by foreign governments.

Let’s Fix This

Now is the time for U.S. businesses, large and small, to make sure the Trump administration knows about those specific obstacles, so that our trade negotiators put their focus on lifting those obstacles in exchange for any tariff relief.  Here are some thoughtful suggestions for a handful of  our nation’s top export categories.

Energy exporters ($320 billion in 2023) should demand an end to foreign government subsidies for coal, oil, and natural gas production, as well as green technologies.  The United States is poised to increase its energy production thanks to new incentives under the Trump administration; let’s not see that advantage limited by a playing field that unfairly supports non-U.S. energy sources.

Agriculture exporters ($178.7 billion in 2023) should demand that foreign governments accept USDA’s approval of biotechnology traits without then requiring their own regulatory approval process.  In practice, foreign regulators have a record of imposing non-science-based criteria on U.S. imports, resulting in unnecessary delays in market access for innovative agricultural biotechnology products.  U.S. regulatory rigor is acknowledged worldwide, and foreign governments should accept our ultimate approval as their own.

Pharmaceutical exporters ($100 billion in 2023) should ask that the U.S. government put its full force behind demanding that foreign governments lift price caps imposed on drugs by government-owned healthcare systems.  These price caps are partly to blame for U.S. drug prices being so much higher than in other countries.  The United States leads the world in pharmaceutical innovation, but that leadership doesn’t come cheap.  In 2022, the U.S. pharmaceutical industry spent over $100 billion on R&D.  It’s time foreign governments step up and pay their fair share.  American patients and consumers should not be subsidizing these incredible life-saving discoveries for the rest of the world.

Semiconductor exporters ($65.9 billion in 2023) should also be demanding an end to foreign government subsidies for semiconductor research and manufacturing, which tilts the playing field away from innovators in the U.S. market.  U.S. companies file the most patents globally in the semiconductor industry; indeed, IBM, Qualcomm, and NVIDIA consistently rank among the top patent holders.  Our hard-earned U.S. innovation advantage must not be allowed to wither in the face of unfair foreign subsidies.

Time to Make a Deal

The Trump administration has demonstrated its willingness to leverage trade and come to the negotiating table armed with options. Let’s make sure those demands are as strategic and informed as possible.  Instead of simply pushing for the elimination of tariffs, U.S. companies should be at the table, driving discussions to finally eliminate unfair trading practices that undermine their global competitiveness and harm American consumers.  Now is the time to make that deal.

Nancy S. Travis

Founder & CEO

Travis Global Strategies