Commentary

Preparing for Trump’s Presidency

If you don’t use scenario planning for your business and for yourself, the time has come. That’s because we’re pretty certain that a Trump presidency will bring much significant change yet remarkably uncertain of what it will be. For example, the Trump campaign’s explicit position on healthcare was that “on day one of the Trump Administration, we will ask Congress to immediately deliver a full repeal of Obamacare.” But last Thursday Trump had coffee with President Obama and emerged saying he was open to keeping two of Obamacare’s key provisions, coverage of adult children through age 26 and guaranteed coverage of pre-existing conditions.

Trump’s shifting positions on many issues leave planners groping for answers. For example, will he really champion his tax plan, which the Tax Policy Institute and the nonpartisan Tax Foundation say would reduce federal revenue, while also keeping his promise to eliminate the entire federal debt in eight years? Who knows?

Scenario planning doesn’t try to predict the future; it tries to imagine various futures and think through the consequences. Shell made the practice famous back in the 1970s when it came through the energy crisis better than other giant oil companies; planners hadn’t predicted the Arab oil embargo, but they had written a detailed scenario of how it might occur and might happen next.

You’ll benefit from writing your own post-election scenarios. Which ones will depend on your business, but here are three to use as thought starters:

-Trump pulls U.S. troops from Europe. European defense strategists are already preparing for this scenario, says Germany’s Der Spiegel magazine. NATO leaders are deeply concerned after candidate Trump called NATO “obsolete” and said he might not defend NATO members as required under the treaty unless they “pay their bills.” As commander in chief, he has authority to withdraw U.S. troops with a phone call. If European governments increase their defense budgets significantly, as some are already doing, what happens to their deficits, interest rates, their economies? Which companies benefit, which suffer? If the U.S. retreats from protection of Europe, what happens to America’s negotiating position with the E.U. on trade, antitrust, and other issues?

-Trump unilaterally imposes tariffs on China and Mexico. He has promised to do so, and he has the legal authority. Do those countries respond with new tariffs? Do U.S. companies with operations there move them elsewhere? Do higher prices in the U.S. create openings for U.S. firms? Make consumers furious? Slow U.S. economic growth?

-Congress enacts significant changes to Obamacare. Full repeal won’t happen; that would require 60 votes in the Senate, which the Republicans don’t have. But Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan say they’re ready to take action soon. Which changes in America’s largest industry have a chance of passing while also letting Republicans declare victory? How would those changes affect employers? Insurers? The many U.S. towns and cities in which medical centers are the largest employers?

Scenario planning is a lot of work, but in our increasingly uncertain world, it’s more than worth the effort.

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What We're Reading Today

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