One of the President elect campaign slogans was to redo the trade agreements, how will that affect existing practices? In a recent article James Bradshaw examined the busiest port in the US – Los Angeles. Goods going through the port is over $270 billion of goods and the top 5 imports are: furniture, auto parts, apparel, electronics, and plastics.  On the face of those imports – walk around the average Wal-mart store where America shops for low prices. Many of the items for sale came from outside the US, not all, but many of them; if the President changes trade prices or products have to be sourced from the US at Wal-mart prices. There is a reason why they moved outside the US.

The top five exports are paper/waste paper, pet/animal feed, scrap metal, fabrics, and soybeans  On the face of it, the paper what we recycle is going offshore to come back as packaging for the things we import. The scrap steel is going to make steel to compete against US Steel. How will this change?

It is relatively easy to say exports and import trade should be change, we should make and sell more of what we consume from within the borders, every leader of every country says it! They have been saying it since there were governments and will continue to say it until the end of the world. Changing the infrastructure which allows the top 5 imports to be made elsewhere and then shipped to the store to the eventual consumer is going to be a big challenge. Some of the biggest investors in the infrastructure are pension funds, because of the continual fees the infrastructure companies make. Think about the railroads moving the goods, the ships, the ports, the roads. If the President wants to dramatically change trade agreements, there will be many companies and areas highly affected which means both Democrats and Republicans will be against the changes but for the principle of the change. Will the consumer want to pay more?

Linking to dividend paying stocks, every year things change in the world and companies try to adapt to the changes. In the case of trade, a President of a large company who does embrace the changes is likely not to have a long tenure as President for a competitor who does will begin to buy assets the company has to sell to remain competitive or pay the bills. If you ever watch a show like Shark Tank – one of the suggestions is to decrease the cost of the manufacturing (send it to China) to retain and increase margins. It is possible for politicians to change the rules, but in will take extraordinary discipline and getting through many competing sides to pass the new changes. In the meantime the status quo will remain which is good for those companies which invest in infrastructure.

There are more questions than answers, till the next time – to raising questions.