Innovation

Trump's hostile attitude toward free trade could threaten tech sector and overseas commerce for US

With President-elect Donald Trump set to take office in January 2017, economists and tech leaders weigh in on how his presidency could impact global trade agreements and the tech sector.

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Image: iStockphoto/scarletsails

Early Wednesday morning, Donald Trump was named president-elect of the United States. While many of his policy proposals around technology remain unclear, his proposed plans for trade leave most economists and tech leaders concerned for the future of the industry.

At this point, it's impossible to forecast what impact Trump's policies will have on the technology sector in terms of finances and trade, said Shane Greenstein, the Martin Marshall Professor of Business Administration at Harvard Business School. "He has expressed hostility to the position of the US in the world trade system. That is an opinion, not a policy," Greenstein said.

Trump has focused hostility toward the basic framework of US trade, supported by treaties such as the North American Free Trade Agreement (NAFTA), which has been in place since 1994. He has also laid out plans to "instruct the US Trade Representative to bring trade cases against China, both in this country and at the WTO," according to his campaign website.

"Again, this is an attitude, not a policy," Greenstein said. "Policies say precisely what the government seeks to get from negotiation, or from new treaties. At this point nobody has any idea what those details will be."

SEE: Hackers attempt DDoS attacks on Clinton and Trump campaign websites using Mirai botnet

US tech firms are major employers of high-skill immigrants. While Trump has expressed hostility toward immigrants, especially low-skill immigrants who originate from south of the US border, it is unclear exactly how he will handle immigration issues, Greenstein said.

Every major US tech company depends on the existing framework for world trade, Greenstein said. Every major high tech and software firm also sources workers from outside the US, employes high-skill immigrants, and sells products outside the US.

"Apple, Cisco, Microsoft, HP, Oracle, Google, Facebook, and so on—these firms dominate their markets, and they will lose out if the costs of inputs and labor increase, or if the number of the potential buyers declines," Greenstein said. Whether input and labor costs will increase, and how much, and whether market buyers will decline, and how much, cannot be determined without knowing the details of a policy, and is therefore open to speculation at this point, he said.

"US firms dominate high-tech trade, and have the most to lose if the existing framework is torn apart," Greenstein said. "Hence, I suspect most savvy tech firms are waking up this morning, and adding staff to their Washington lobby organizations, with the aim of trying to protect the world trading system they dominate."

In July, 145 tech leaders penned an open letter, warning that a Trump presidency "would be a disaster for innovation." "His vision stands against the open exchange of ideas, free movement of people, and productive engagement with the outside world that is critical to our economy — and that provide the foundation for innovation and growth," the letter, published on Medium, stated.

In February 2016, Trump encouraged supporters to boycott Apple until CEO Tim Cook honored a court order to unlock the San Bernardino shooter's iPhone.

Last week, we polled TechRepublic's CIO Jury panel of technology experts to gauge their thoughts on how a potential Clinton or Trump presidency could affect the industry. When asked "Will the results of the US presidential election impact the future of tech?" seven tech leaders answered yes, while five answered no.

Trump's negative stance on net neutrality has "potential negative implications in terms of wider accessibility to the net," said Florentin Albu, CIO, Ofgem E-Serve, a member of the CIO Jury. "A strong focus on homeland security could result in weaker encryption for US IT exports. The unclear position on highly-skilled immigration might result in a shortage of specialist workforce."

Forrester projects 5.1% growth for business and government spending on tech goods, services, and staff in 2017, according to its recently published 2017 US Tech Budgets outlook report—an improvement from the 4.4% growth forecasted for 2016.

However, this forecast "assumes a continuation of the economic policies now in place under the Obama administration and the Republican Congress, and thus a Hillary Clinton election along with Republican control of at least the House of Representatives," Forrester's Andrew Bartel noted on ZDNet. Therefore, it remains to be seen how this will change with the election's results.

The 3 big takeaways for TechRepublic readers

  1. President-elect Donald Trump's proposed plans to dismantle US trade agreements have economists and tech leaders concerned about the future of the industry, experts said.
  2. Every major US tech company depends on the existing framework for world trade, employs high-skill immigrants, and sells products outside the US, so Trump's policies could impact their business significantly.
  3. It remains to be seen whether input and labor costs will increase or whether market buyers will decline without knowing the details of a policy, experts said.

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About Alison DeNisco Rayome

Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.

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