American Influence

I don’t know whether you have ever thought about it, but it became apparent to me recently just how much the USA and what happens there influences our lives.

You might not normally think about it but Google, Amazon, Facebook, Twitter, Microsoft, Boeing and Citibank, to name but a few, are all American companies. It is startling to realise just how much we use and rely on the products of American companies.

I was looking at an industrial strategy the other day and in the particular area I was dealing with the “go to” experts were in the US. There was no real question of looking for an alternative supplier, we could either go to the US for help or we would have to grow the expertise over time in house.

In general terms, US companies can be very helpful. The US is our closest ally and the UK does a great deal of business with the US. US companies are generally interested in doing business, but the terms have got to be right. There is nothing at all wrong in this approach but expect negotiations to be interesting before coming to a mutually beneficial agreement. The same advice might also apply to our trade negotiators when looking to do a post Brexit trade deal with the US, but I am sure they are already fully aware of this.

A few things have happened recently which might make us question the US/UK relationship. There is no doubt that the current US government can be quite volatile. This creates uncertainty. What happens if one of my employees once had a Huawei phone? Could my firm be subject to sanctions by the US government? In which case, my supplier might be banned from trading with me.

If I want to build a product for the US without worrying about international supply chains, should I actually be based in the US? Should the company become a US organisation?

In my opinion, the issue of using political influence to gain purely trade advantages is unwise. Such behaviour could, potentially, be seen as an abuse of power. The US is not the only country to engage in such antics, but I suppose we have come to expect better from them.

It is always useful to have more than one supplier but if we have to factor in that these suppliers should be in different countries, then we might have to consider the implications of increased costs. In the longer term the use of tariffs and threats is likely to reduce US influence as other countries may be motivated to build alternative supply chains but in the short-term weaker players could suffer considerable disadvantage.

Brexit could create further problems for the UK. US companies can often be far more effective and efficient than their UK counterparts, though this is by no means always a given. However, the chaos created by the botched Brexit process could place the UK at a severe competitive disadvantage when it is least able to do anything about it. This, in turn, may not be the best news for us here in Yorkshire as Yorkshire based businesses could suffer as much as those in the rest of the UK. The UK’s potential isolation may make it a less attractive place to do business. The US and Canada could be the main beneficiaries here.

The nature of the relationship between the US and the UK is always going to be biased in favour of the US due to the size of the US economy when compared to that of the UK and the extent of market penetration of US businesses plus their knowledge base, scale, expertise and so on. US influence is pervasive. In normal circumstances this might not matter too much but when combined with a volatile US government and a weakened UK, this relationship could become unhealthy.

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