In the face of a trade war with China and tightening immigration policies, many U.S. companies are trying to deal with uncertainty and evolving policies and address how these will impact their companies. New immigration policies and regulations have the potential to affect the diversity of their workforce, new tariffs and tax reforms may impact their ability to do business in foreign and domestic markets, and stock markets are skittish in the face of a U.S.-China trade war.
To find out how companies are dealing with some of these issues–immigration and protectionist policies–IMA® (Institute of Management Accountants) conducted a survey of U.S. senior finance professionals in March 2018.
We asked respondents to what extent they agree with the following statement: “Immigrants have made a very positive impact on American business.” Of the 46 survey respondents: 61% agreed, 17% somewhat agreed, 17% said “neither agree nor disagree,” and only 5% somewhat disagreed. Thus, there is general agreement that immigrants have had a very positive impact on American business.
The majority of respondents (78%) have less than 25% non-U.S. citizens in their workforce. More than half felt that current immigration policies have had no effect on their ability to hire individuals with necessary skill sets. Yet 31% said these policies have made it more difficult to find people with needed skill sets. Given that most of the respondents’ companies have workforces that are largely comprised of U.S. citizens, this inability to hire workers with desired skill sets is significant.
Tariffs and trade wars are not new. In his best-selling book, Good to Great, author Jim Collins compares the reactions in the early 1980s of two steel companies, Bethlehem Steel and Nucor, to the challenge of cheap imported steel. The two companies had very different views. Bethlehem Steel’s CEO said its No. 1 challenge was imports and favored protectionist policies. Nucor, on the other hand, saw it as an opportunity to exploit foreign producers’ need to ship their product across the ocean and spoke against government protection against imports. He said the real problem facing the industry was that the American steel industry had failed to keep pace with innovation.
Similarly, there were differing views among the respondents on recent protectionist policies. Most said they aren’t having difficulty competing globally as a result of recent U.S. protectionist efforts. Yet there were different views on the following policy issues:
- 43% disagreed (34% neutral) that President Trump’s decision to impose steep tariffs on steel and aluminum will have a positive impact on their company.
- 51% disagreed (34% agreed) that steep tariffs on steel and aluminum will positively impact employment in the U.S.
- 34% agreed (48% neutral) that reducing the U.S. trade deficit would have a positive impact on their company.
- 48% disagreed (34% neutral) that their company is having increasing difficulty competing globally.
- 47% disagreed (38% neutral) that their company is having increasing difficulty competing with China.
THE IMPACT OF GOVERNMENT ACTIONS
As with Bethlehem Steel and Nucor in the early 1980s, the survey results show differing views on the changing immigration and protectionist policies today. More than 50% of the respondents said that changing immigration policies have had no effect on their ability to hire individuals with necessary skill sets, but more than 30% said these policies have made it more difficult. And more than one-third feel that reducing the U.S. trade deficit will positively impact their company, while 48% were neutral.
On a personal level, more than 40% disagree with President Trump’s decision to impose steep tariffs on steel and aluminum while most of the rest are neutral. More than 50% disagreed (34% agreed) that steep tariffs on steel and aluminum will positively impact employment in the U.S. To tariff or not to tariff? That is the (tough) question. It depends on who you ask.