Business leaders around the world think consultant and bestselling author Ram Charan is worth listening to, and with good reason. Some 40 years of advising the world’s top CEOs has given him insights few can match. This morning he shares some of what he’s telling clients this week:
While Donald Trump seems not to have done well in the debate on Monday, polling results still show an extremely close race. CEOs must ditch the wishful notion that he will not win the election. He could. So be prepared for the potential fallout from a President Trump’s actions on these issues:
International trade:Based on campaign promises, he’ll have to negotiate with the most chronic and persistent U.S. trade deficit countries to achieve balance, persuading them to take corrective actions. It won’t be easy, but success here could create domestic jobs and contribute to federal deficit reduction. Done poorly, it could result in trade war.
A middle-class tax cut: He has promised a massive cut that will be hard to deliver. But even if he’s only partially successful, the effects on consumers and on your employees could be substantial.
Investing in infrastructure: This makes good sense in theory. In practice it will be constrained by fiscal reality, and there’s always the question of whether projects would be value-creating investments or bridges to nowhere. But again, even partial success could produce significant effects.
These three initiatives done right will contribute to GDP growth.
In addition, pay close attention to the team Trump assembles to run the departments of State, Treasury, Commerce, and Defense. Secretary of State John Kerry is consumed by Syria, Russia, and the Middle East, with little else happening in the management of U.S. foreign policy. One hears little from Treasury Secretary Jack Lew or Commerce Secretary Penny Pritzker. Leadership in both those departments is needed for GDP growth.
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Luck favors the prepared. Lose no time in exploring how various scenarios, particularly major changes in currency exchange rates, disruptions in the flows of materials and final goods, or the imposition of tariffs could affect your business. Selection of a President Trump’s team could be an important determinant of all those changes; let it be your early warning signal.