Trade in transition unsettles trade associations

US trade associations once able to count on globalizing markets to provide customers and supply chains for their members are now struggling in a period of destabilized trade systems.

President Trump’s tariff actions escalated this issue to urgent this summer, but trade systems will be in transition for at least the next few years.

First, there’s Trump’s determination to ditch multilateral agreements and cut his own bilateral deals. While upcoming elections and the volatility of the administration’s priorities are key uncertainties, his actions have already disrupted global harmony around free trade and unsettled trade policies.

Second, there’s Brexit and what that could mean for the stability of the European Union, perhaps the best proof of concept of what unified markets can offer its participants.

And then there’s the strong political crosscurrents of rising nationalism and isolationism fueled by a global refugee crisis. The future of globalism doesn’t look too secure.

Businesses factor trade regimes into their business models and cost structures. The more markets are stable and harmonized, the happier trade association members are. As the current tariff wars illustrate, some industries win, while others lose. And even more challenging, sometimes companies within a single industry can be either winners or losers. Multinational companies might be in an uproar, while domestic companies might feel they have gained a competitive advantage over their larger competitors.

US trade associations are mobilized over tariffs. The U.S. Chamber of Commerce features a webpage topped with the banner: Trade works. Tariffs don’t. An interactive map underscores state by state what is at stake. The National Association of Manufacturers names China as the common enemy guilty of unfair trade practices while declaring no one wins a trade war. But the American Soybean Association says farmers need China’s market, which prompted Trump to now propose a multi-billion dollar bailout to offset farmer losses.

If you have any doubt that trade in transition sets off a string of unintended consequences, this New York Times story will walk you through the winners and losers.

What’s unchanged is trade association members still expect their associations to fight for their interests, regardless of whether those interests are clear or how a strong stance might jeopardize political alliances. Association executives are losing some sleep over member unrest.

During times of uncertainty and transition, the strategic questions to ask go beyond today’s headlines to the underlying forces of change and what they might yield. Interdependence could determine our future, but we might achieve it through different means than today’s globalism and free markets. Whatever fair trade is, it will be defined by evolving values around equity. New structures and values will emerge. A winning trade association should be thinking about playing the long game to shape that future.