The End Of Days
I have just participated in one of the panels following VP Mike Pence address to a room full of foreign investors and foreign trade delegations at The US Chamber in DC. VP Pence made an unambiguous commitment to the audience that the US is open for business and that he and the President were just getting started on regulation and tax reforms to improve the attractiveness of the US for business. It did not sound like an anti-globalisation or protectionist speech, but did underline the principles of fairness and reciprocity in trade deals.
The fact is that in the 6 months since November when the new administration was appointed, the US economy has been doing well with record stock market performance and record levels of job creation. This is perhaps more built on expectation than actual delivery of tax or legislative reforms which are proving harder for the new team to deliver. FDI is also an interesting bell weather of confidence and we have seen 30% growth of project numbers and 40% growth in foreign capital coming into the US in the last 6 months, while FDI from US companies investing overseas has dropped by 19%. Of course 6 months is hardly a trend and I suspect the motives behind the inward flows maybe part of a fire sale get in before they build the wall, revoke visas or enforce the ‘buy American, hire Amercian’ pledge, rather than an indicator that the US has suddenly become a more attractive location. It is also clear that major US firms are at pains to show their patriotic colours and while that cannot realistically replace global supply chains in 6 months or possibly ever, it would be a courageous company that announced major re-locations to Asia right now.
We at OCO are seeing a significant uptick in interest from our clients in the US market and have advised some 200 firms in the last 12 months on options to enter and expand in the US. The most dynamic sectors are technology, health tech, transportation and food and drink, while we are seeing acute interest in what new energy, healthcare and infrastructure policies might look like as they roll out. All of this proves that it’s not always what you achieve, but how you set out your stall, and lets hope the fundamentals of the US economy remain strong and get better.