In last week’s column, I encouraged you to regularly evaluate the elements of your marketplace that might impact the value proposition that you make to your customers. Those elements include your customers, competitors, company, and the “environment” of your marketplace. I indicated that as any of these elements change, they can have a profound impact on the effectiveness of your value proposition. In today’s column, I want to focus on the marketplace environment as it is the most likely to experience change given the first ten days of President Trump’s new administration.
As I addressed in last week’s column, some of the major marketplace “environmental” conditions include economic conditions, governmental/regulatory conditions, socio-cultural factors, and the rate of technological change. President Trump, through a series of executive orders and policy statements, has clearly indicated that he intends to be a “change agent” and many of his changes can potentially impact businesses and their marketplaces. As business leaders and owners, it is important to understand which of the things that President Trump says are things he can and will do, and how those things might impact your marketplace’s environment. As I mentioned in this space on December 18 in a column focusing on my predictions based on President Trump’s campaign promises, his initial statements are often rhetoric to begin negotiations rather than final positions. Therefore, it is more important to address the trajectory of President Trump’s statements rather than an endpoint. So, with that in mind, we will look at the start of President Trump’s second term and see where he might be going and how it might impact your marketplace. Here are some of the major areas he has addressed right from the start:
- “America First Trade Policy”: The centerpiece of President Trump’s economic and trade agenda is captured in this policy memorandum accompanied by four executive orders. Much of what is found here are ideas such as a global supplemental tariff and other individual tariffs on various countries, used primarily as a trade tool, but also a tool to address issues such as drugs and immigration. For instance, this past weekend, when Colombia resisted the return of deported migrants, President Trump imposed a 25% tariff (with a potential increase to 50%) on all Colombian goods imported to the United States, leading to Colombia’s acceptance of the migrants.
Marketplace Implications: If you have international suppliers, your costs may increase significantly due to such tariffs. This could seriously impact a low-price value proposition or make a high-quality value proposition cost-prohibitive. In order to maintain your current value proposition, you may need to consider shifting to domestic suppliers or in some cases produce items yourself. I would recommend a review of your current sourcing portfolio to determine the potential impact of tariffs on the cost of imports.
- “Unleashing American Energy”: President Trump has signed several executive orders aimed at increasing American energy production and infrastructure. The goal is to ensure an abundant supply of readily accessible reliable energy in every state. In addition, electric vehicle (EV) mandates and subsidies have been eliminated.
Marketplace Implications: You will need to examine changing energy costs and determine the impact it might have on how you and your competitors might compete. Those who invested early in EVs and other non-traditional energy sources may be at a significant cost disadvantage given the impending decreasing cost of traditional energy. - Immigration and Border Security: There are pros and cons that businesses have to evaluate related to the six executive orders President Trump signed related to immigration and border security. Increased immigration enforcement can disrupt businesses that rely on immigrant labor, such as agriculture, hospitality, and construction. However, it could also make some areas more secure for travel and tourism. Increased security at the southern border can slow down supply chains dependent on trade.
Marketplace Implications: Certain industries, mentioned above, could experience labor shortages given increases in immigration enforcement. Shortages in labor could result in more expensive labor, slower service, and an overall decrease in service quality, negatively impacting one’s value proposition. Similar to tariffs, companies can be impacted by an inability to move goods quickly through the southern border, increasing the need for domestic suppliers.
- Deregulation: As I noted in my December 18 column, I saw one of the major benefits of the new Trump administration being the reduction of burdensome regulation, particularly in industries such as manufacturing and financial services. I do think much of the regulation reduction will be positive, allowing firms to better serve their customers rather than tracking compliance. However, the pendulum of regulation could swing too far, allowing customers to be put at risk if there is too little regulation.
Marketplace Implications: Reduced regulation can definitely impact a firm’s value proposition. A reduction in regulatory requirements can allow the firm to reduce costs and pass those savings on to their customers and/or invest those funds in improved quality or service. Additionally, if a market becomes underregulated, a firm can win customers by promising increased self-regulation to guarantee customer safety and security.
As you can see, President Trump has implemented numerous executive orders and policies that can and will impact various marketplaces. In the coming weeks and months, it is critical for all business leaders and owners to closely monitor the changing governmental and regulatory environment and their impact on economic conditions, social and cultural factors (e.g., DEI), and rapid technological change such as increased investment in AI which will substantially change marketplaces and your value propositions.
