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All Contents © 2017The Kiplinger Washington Editors
By James Brumley
| January 2017
Right or wrong, there’s no denying President-elect Donald Trump’s “America First” policies are making an impact on U.S. companies’ plans to move jobs from U.S. soil to foreign lands.
In mid-November, Ford Motor Company (F) announced it had changed its mind and wouldn’t be moving production of the Lincoln MKC from Louisville, Kentucky. That line was otherwise headed to Mexico until, arguably, Trump was clearly going to shame the company into submission. In early December — under pressure from Donald Trump — Indiana-based HVAC equipment maker Carrier opted to keep a few hundred jobs at home rather than move those positions to Mexico.
Point being, the “America First” mantra wasn’t just a campaign slogan. Donald Trump clearly has every intention of creating or preserving as many American jobs as he can, no matter how it gets done.
This mindset and mission poses potential problems for some companies that rely heavily on overseas manufacturing. These 10 major corporations are particularly vulnerable.
This slide show is from InvestorPlace, not the Kiplinger editorial staff.
While Trump’s “victory” over Ford’s plans in mid-November was a little anemic (the word is that no jobs were going to be lost even if the Lincoln MKC’s production was moved south of the border), it’s tough to deny Ford hasn’t taken notice of, and responded to, Trump’s rhetoric.
Just last week, the carmaker canceled plans to build a new $1.6 billion plant in Mexico. Ford CEO Mark Fields made a point of saying the decision had nothing to do with Trump’s policies, but rather were driven by market conditions. The timing of the decision is uncannily coincidental, though.
And yet, as compelling as the last few weeks of headlines have been, the reality is that Ford along with its peers would still love to transplant more production of its vehicles to locales outside of the United States … where costs are considerably lower.
Whereas Ford was at least willing to extend an olive branch to Donald Trump by throwing him a couple of bones, General Motors Company (GM) has been publicly more resistant to the President-elect’s America First initiatives.
Granted, Trump’s tweet that criticized GM for making the hatchback version of the Cruze was a bit misleading — most of those Mexican-made Cruze’s aren’t sold to U.S. consumers.
But, with General Motors planning more than a thousand layoffs at a Lordstown, Ohio, plant in the shadow of record-breaking auto sales in the United States, it makes GM an easy target for criticism.
Mike Mozart via Flickr (Modified)
Snack food company Mondelez International Inc. (MDLZ) — the maker of Oreos, Tang and Trident gum, just to name a few — was called out by Donald Trump during his campaigning after the company moved a few hundred jobs from Chicago to Mexico.
Mondelez has managed to remain out of the spotlight since then, but clearly it’s one of the companies that’s on his radar.
Cognizant Technology Solutions via Flickr (Modified)
It has been one of the less-discussed nuances of Trump’s “America First” push, but his policies would effectively cut back on immigration, curtailing the inflow of qualified IT workers, and limiting some U.S. technology companies’ ability to grow.
Cognizant Technology Solutions Corp. (CTSH) could feel that pain more than any other tech outfit, in that it’s the biggest employer of foreign workers within the technology sector.
Last year, it employed 15,680 H-1B (a U.S. work authorization) individuals.
Along those same lines, Accenture Plc. (ACN) could find relatively the same amount of trouble hiring qualified workers as Cognizant does.
Accenture employed 5,793 H-1B workers last year. If immigration and work-authorization rules tighten, Accenture’s business could be crimped.
Amazon.com, Inc. (AMZN) was another U.S. company Trump criticized during his campaigning. Although his criticism was aimed more at Amazon CEO Jeff Bezos’ ownership of The Washington Post, the President-elect has cited antitrust concerns about Amazon.
While the e-commerce giant doesn’t have any sort of actual monopoly on the market, there’s no way of denying its business has been largely built on the sale of goods mostly made outside of the United States.
Trump’s proposed import tariffs could make life very difficult for Amazon.
Kārlis Dambrāns via Flickr
Should Trump’s proposed import tariffs start a much-feared trade war with China, chipmaker Qualcomm, Inc. (QCOM) could be among the hardest hit.
More than half of its revenue comes from China alone, and retaliatory tariffs could put the kibosh in that business in a hurry.
Justin Smith via Wikipedia
Even within the railroad industry’s social circle, Kansas City Southern (KSU) isn’t exactly a name that turns heads. So why is the company finding itself in the spotlight now?
It’s the one railroad with the most to lose as Donald Trump turns his “America First” philosophy into policy.
If trade between Mexico and the United States is stymied, demand for the usage of a key piece of its rail lines will be hurt. Nearly half of the company’s revenue comes from deliveries to or from Mexico.
Courtesy General Electric
Giving credit where it’s due, it was Jim Cramer who first floated the idea back in March 2016, well before Donald Trump was elected.
The impact of an “America First” mindset may not just be an trade policy, but a political one. Those countries adversely impacted may choose to retaliate against U.S. companies by refusing to buy our goods.
That puts a whole slew of corporations at risk like the aforementioned Qualcomm, but perhaps none as much as General Electric Company (GE). Not only are 70% of its orders from foreign customers, GE purchases a lot of foreign-made supplies that could soon become much more expensive.
Finally, while most U.S. companies only have to worry about the “America First” initiative from Donald Trump for one reason or another, retailer Wal-Mart Stores, Inc. (WMT) may find itself fending off the impact on several fronts.
First, if Trump successfully spurs new American jobs, that could force Walmart to pay higher wages to its workers.
Second, as was the case with Amazon, tariffs on foreign-made goods will increase the company’s inventory costs.
And third, as was potentially the case with General Electric and others, a political backlash could make business very difficult to conduct outside of the United States. Roughly one-fourth of Walmart’s revenue is generated outside of the U.S.
This article is from James Brumley of InvestorPlace. As of this writing, he held none of the aforementioned stocks.
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