Trade War Trauma – Business’s Next Big Challenge

The economy and the business environment have been doing well – at least in the broadest sense, though particular employers and regions may beg to differ. With unemployment at a comparatively-low 4.0% and healthy consumer demand for goods and services, recent trends would seem to be generally favorable for an economically-healthy 2018 – in spite of what seems to be a looming trade war.

Recent tariff increases, particularly reciprocal rises imposed by the U.S. and China, have so far had little major U.S. economic impact; economists have suggested that the effects could be limited to as little as .1 – .2 percent of U.S. and Chinese GDP in the near term. While that figure would seem to be easily absorbable by the economy as a whole, the impact is not evenly distributed – in fact, it is likely to be tightly focused on specific regions and industries. This stands to magnify its ripple effects, particularly in Michigan.

Regionally, the economic shock is focused on agriculture and manufacturing, with soybean exports threatened and the cost of imported woods and metals rising. As China and Canada turn away U.S. soy, dairy and citrus and the cost of wood, aluminum and steel rises, Michigan and Florida stand to be disproportionally affected. For employers throughout the value chain, this adds up to increased uncertainty as agricultural and manufacturing businesses start to constrain expenditures, limit production, and prepare for contraction in their markets.

It’s impossible to know how significant these effects will ultimately be over time; consequently, each new hire becomes an increasingly risky proposition for businesses in affected industries. At the same time, a smaller pool of available labor has left many companies struggling to meet demand, and needing to increase capacity. When it’s possible that market conditions can significantly shift at any moment, companies need to find ways to become more flexible and adaptable if they are to maintain their footing.

While flexibility is best for business in normal circumstances, it is absolutely essential during periods of change and instability; as companies are called on to adapt to higher material prices and pressures on demand in the coming months, the “winners” are likely to be those which can dynamically adjust their head counts to reflect current conditions. Trion Solutions helps our partners to achieve this level of flexibility. By working with us, our clients gain the agility they need to respond quickly to market conditions, right-sizing their operations on the fly as changing circumstances demand.

Right now, there’s little sign of trade disagreements diminishing any time soon. New punitive measures seem to be announced on at least a weekly basis by the U.S or one or more of its trading partners. In the meantime, other economic factors are showing some worrying trends: Inflation has recently increased sharply, effectively erasing recent gains in personal income. While no one yet expects a full-fledged recession in the near term, it seems reasonable to expect that there will be some serious turbulence in many business sectors. Trion Solutions will be keeping an eye on these trends, and helping our clients to adapt as quickly as possible to any changes – for better or worse.

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