Donald Trump’s US presidency is cementing a more protectionist approach to trade in the world’s largest economy. He’s promised to impose punitive tariffs on some imports into the United States and has pulled the country out of the Trans-Pacific Partnership (TPP), an ambitious “next-generation” pact designed to tackle the complications of cross-border commerce. Furthermore, Brexit has called the integration of Europe — and Europe’s future relationships with its trading partners — into question.
China, meanwhile, has introduced stringent capital controls to stop a tide of money from leaving the country. And in their efforts to crack down on financial crimes and tax evasion, regulators worldwide are subjecting international transactions to ever-higher levels of scrutiny. That implies limited progress on one of the biggest issues affecting our customers trading internationally — onerous and disparate financial regulation, particularly the processes that need to accompany the cross-border movements of funds.
Advocates of freewheeling, globalised commerce suddenly find themselves on the back foot.
Let's not panic
We have clearly entered a period of heightened volatility and uncertainty, and in a potentially higher-tariff environment companies doing business internationally would be well advised to examine their supply chains, as well as reassess their cross-border cash management processes (see box for some of our key recommendations).
That being said, they should also avoid the tendency to over-react to alarmist news headlines. As my colleague Richard Yetsenga astutely pointed out in a recent article on the topic, President Trump doesn’t have the ability to completely turn the global tide. The commercial realities driving globalised commerce are still in force, and in the Asia-Pacific at least, governments are still committed to policies that reflect this.