Decoding Trump’s Impact on the ECommerce Sector
The purpose of this article is not to provide support or opposition to any politician. Its goal is to furnish the business community, and especially the participants of the eCommerce business, with useful information which can be used during the planning of the business for the coming four years.
The American election is finally over. Donald Trump has just become the 47th President of the United States. The stage is set for significant changes in the political landscape that could directly impact the eCommerce sector. As businesses navigate through the complexities of his administration, understanding the potential implications of his policies becomes crucial. The following points highlight key areas that eCommerce stakeholders should monitor closely, considering both opportunities and challenges that may arise in the wake of this election.
Tax Reforms: In a somewhat controversial decision, the Tax Cuts and Jobs Act of 2017 significantly cut corporate tax rates from 35 per cent to 21 per cent. This was presumably to encourage capital investment in the economy. eCommerce businesses are the biggest beneficiaries of this denial through the increased amount of capital that will be put for investment.
Impact: In the United States, corporations may use the returns from cost-reduction measures in hardware and marketing which also promotes growth and development. On a global scale, this may enable U.S. eCommerce websites to provide competitive pricing in international markets. Reference: Congressional Research Service (2018), “The Tax Cuts and Jobs Act: A Comparison of the House and Senate Bills.”.
Trade Policies: under the patriotism slogan offering the “America First” policy, Trump’s administration placed restrictions to import some kinds of merchandise, especially from China. This policy made it very difficult for most eCommerce companies that relied on imports to operate since the cost of goods sold online increased.
Impact: Higher costs in the US for eCommerce companies could see these companies exchanging higher prices for certain goods, which will only result in weakening their competitiveness against transnational eCommerce platforms. Internationally, countries exporting to the U.S. may seek alternative markets, reshaping global supply chains. Reference: United States Trade Representative (2019), “2019 National Trade Estimate Report on Foreign Trade Barriers.”
Deregulation: The Trump administration actively worked to reduce federal regulations, including those affecting businesses. This deregulation can lower barriers to entry, particularly for startups in the eCommerce sector, fostering competition and innovation.
Impact: In the US, this may lead to an avalanche of new creators of eCommerce companies. In countries outside the US, they may link opportunities to enter markets with cooperation with less regulated American entities. Reference: Office of Management and Budget (2020), ‘Unified Agenda of Regulatory and Deregulatory Actions’.
Technology and Infrastructure Investment: Trump showed some willingness to work on US infrastructure and extend broadband coverage. Investment in digital infrastructure will also improve the growth potential of eCommerce by extending its reach to rural regions.
Impact: Improved connectivity in the USA has the potential to increase the incidence of eCommerce in the previously ignored regions. Other regions will be able to benefit from cross-border eCommerce where US businesses will seek to extend to other new regions. Reference: Federal Communications Commission (2020), ‘2019 Broadband Deployment Report.’.
Consumer Sentiment: During Trump’s presidency, consumer confidence often rose, which can correlate with increased spending. The Consumer Confidence Index showed fluctuations but often indicated optimism about economic conditions.
Impact: In the USA, higher consumer confidence likely drove eCommerce sales, while abroad, U.S. companies benefiting from positive sentiment might find greater receptiveness in international markets. Reference: The Conference Board (2019), “Consumer Confidence Survey.”
Focus on American Manufacturing: Trump’s policies aimed at revitalizing American manufacturing may encourage eCommerce businesses to source products domestically. This shift can alter supply chains and promote local products in the eCommerce marketplace.
Impact: U.S. eCommerce companies will be able to use the “Made in America” slogan that will cater to its local and foreign customers. This is the direction in which the tendencies are going, towards promoting the American economy and ecology. Reference: U.S. Department of Commerce (2018), “The State of U.S. Manufacturing: Growth and Opportunity.”
Shifts in Marketing Strategies: Political events can influence consumer behavior and sentiment. eCommerce brands may adjust marketing strategies to resonate with the prevailing political climate, appealing to consumers’ values and beliefs.
Impact: In the USA, this could lead to tailored marketing campaigns that reflect local sentiments, while internationally, U.S. brands may need to navigate differing political landscapes and consumer expectations.
Reference: Nielsen (2016), “The Global Responsibility Report: Consumer Attitudes Towards Corporate Responsibility.”
The implications of Donald Trump’s presidency on the eCommerce landscape are multifaceted, presenting both opportunities and challenges for businesses. By understanding these dynamics, eCommerce leaders can better position their companies to thrive in a shifting environment. Whether it’s leveraging tax benefits, adapting to changing trade policies, or responding to consumer sentiment, staying informed and agile will be key for success in the evolving digital marketplace. As the industry adapts to these changes, businesses must also prioritize innovation and customer engagement to remain competitive.
