For all President Trump’s shortcomings (and I, for one, have been known to go hoarse expounding them), his administration has thus far proven a pretty darn good deal for America’s consultants.
So far, the economy has continued to look sharp; a rather, uh, relaxed approach to regulation has allowed compliance-wary businesses to shift their focus to other priorities; and a tax overhaul that one might modestly describe as “business-friendly” has freed up a whole lot of corporate cash that’s being eagerly poured into growth, technology, and operational improvement initiatives. So far, it seems consultants have had little reason to complain. Indeed, after getting off to a slow start (much of that owing to clients wanting to find their feet in Trumplandia before making any big moves), the US consulting market grew an impressive 8% last year and looks on track to do even better in 2018. Huzzah!
But with the President now spoiling for a “good” and “easy to win” trade war, we can see consultants’ grimaces beginning to form. Sure, Trump has been tweeting jabs at our trade partners since the early days of his campaign, but my goodness, he says so many things—who can even keep up? And amidst the bluster and even the occasional action (TPP, anyone?), there were frequent signs that cooler heads—also known as “economists”—might prevail: a softening of language on NAFTA, a brief cessation of hostilities with China, a flurry of exemptions from punitive steel and aluminum tariffs. As one senior management consultant told us back in the spring (practically a millennia ago in TrumpWorld), the prevailing opinion has been that “Trump is a lot more bark than bite when it comes to his trade policies,” and this ultimate toothlessness, he added, is the “base assumption that clients are operating under.”
Unfortunately for those clients—and perhaps for the consultants serving them—that “base assumption” has started to show some serious cracks. Indeed, last week we saw the President let the clock run out on tariff exemptions for Canada, Mexico, and the European Union AND we learned that NAFTA talks collapsed following a shocking Trump administration ultimatum requiring that any deal come up for renewal every five years. Oh, right, and news also broke that Trump is apparently flirting with the idea of banning all German luxury car imports. And all of that happened on a single Thursday. So forget cracks: It’s starting to look like that base assumption around trade is developing yawning fissures.
The latest trade developments have brought cries of displeasure from a wide swath of America, uniting farmers and manufacturers with Wall Street and the Republican Congress in shared outrage. Maybe they’re all wrong—maybe they’re all about to be dazzled by The Art of the Deal, when trading partners and allies all cave to The Donald’s demands and America is made “great again.” But even if that all pans out, you can bet that a lot of clients are going to feel newly skittish about making big decisions for some time to come. If enough of them feel that their base assumptions are no longer valid, there’s a very real possibility that consultants will see a second half of 2018 that looks a lot like the first half of 2017, which is not something many consultants would want.
So, is there anything to be done? Anyone who can shore up that base assumption and help clients hang on to that spendthrift mood? Well, maybe. In a rare bi-partisan moment, a diverse group of senators are beginning to talk seriously about legislative action to pare back Trump’s power to unilaterally issue tariffs in an effort to undo much of what has been done. For those who think things are headed in the wrong direction, it’s good news. The bad news? The whole thing hinges on the United States Congress banding together across party lines to get something done. If it feels like a longshot, that’s because it probably is. And as a delightfully frank consultant recently told us, “I hate to be so cynical, but the reality is that most of our clients count on Congress not being able to get anything done.” For better or worse, it’s usually a sure bet. So, will one base assumption die so that the other might live? And can two base assumptions really fall so spectacularly in so short a time? It’s not without precedent—especially not in the Trump administration.
By B.J. Richards of Source Global
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