When looking at the political status of most of the world, at this point it can seem to be all doom and gloom. This political uncertainty can have a variety of different effects on the US business market, from trading availability to the simple success of its operation. Here is a look at how political uncertainty, both in the US and worldwide, affected the business market in America over the course of 2018.
The Impact Of Presidencies
With every presidential race within the United States and every month of their term in the White House, political uncertainty is rife. Whether this is simply due to the typical strains of presidency, or because the country is in turmoil, business markets can suffer as a result.
A prime example of this is the political uncertainty that remained with the end of the Obama presidency. Although this did not appear to have an immediate huge impact on the stock market, it has been proven that there was a 9% annual increase with the Democrats in control when compared to a 6% increase under the Republican administration. There has also been evidence to suggest that there is a 16.9% increase when a political party is in charge of both Congress and the White House as this appears stronger from a political standpoint.
Cease Of Trading With Iran
In a harsh statement posted on Twitter following sanctions from the US against Iran, Donald Trump said: ” Anyone doing trading with Iran will not be doing business with the United States. I am asking for world peace, nothing less.” This bold statement from the United States president saw a strong reaction from the world’s media, as has become standard for many of the President’s tweets.
This has had a dramatic impact on stock markets and trading around the world; following the withdrawal from the Iran nuclear deal, there has been a slight increase in the price of oil as a whole. However, this was already on the rise leading up to this and accelerated the overall process. This indicates that businesses are not fazed by the US effectively withdrawing from a number of trade deals. Whether this is down to strong regulation, just like in the case of currency exchange trading, or presidential influence, the US economy stood strong, but this withdrawal did still have an extremely negative effect on the economy in Iran. These strong sanctions have limited the number of imports and exports being made to and from the country.
The Brexit Aftermath
Although the aftermath of Brexit shouldn’t directly affect the US economy, this bold decision by the UK has to lead to a large amount of uncertainty around US and UK trade – until recently. It was political uncertainty on steroids.
On February 15th 2019 a meeting was held between Britain’s Prime Minister Theresa May and the US president to discuss the potential of a trade deal following UK’s exit from the European Union. This £12.8 billion deal builds a very strong trading relationship and this is then strengthened further. Although this deal was not free, there are fewer restrictions on imports and exports, making access to the market much easier for the US.
However, it is said that the UK will benefit within a number of sectors including pharmaceuticals, telecoms to name a few that equates to a total of 7.7 billion in US exports. This deal comes after negotiations were hinted at in 2017. Now that a deal has been closed between the two countries, there are strong connections for trading that could prove beneficial to the global trading market overall.
Not only do the elections that are held within the United States affect their business market, but elections held around the world can also have the same effect. In 2018, there were elections in both Mexico and Brazil which have a profound effect on the business environment in the United States. In addition to this political uncertainty, the Russia-US relationship is still very strained. This contributes to the strain on the business environment and leads to uncertainty around commodities such as oil that are of high importance within global trading.
Tension is detrimental to the business environment, due to the fact that it can have a substantial effect on the price of trading, as well as the speed and efficiency of goods being sent to and from the country. If there are tight regulations surrounding trading then this can be an influence on the number of restrictions that are placed at border control. If the borders are tight then this can increase the amount of time it takes for a parcel to reach the border; this is, therefore, something that should be considered by businesses looking to trade or send packages to this part of the world, as this could increase the time it takes for your operations to be successful.
Ubiquitous Political Uncertainty
Although there are many elements that influence changes in the business market, it is important to remember that staying on top of the news helps businesses better anticipate these changes and plan to combat them.
Political uncertainty is always there, because the interaction between states and between countries is ever-changing.