During the campaign, at President-elect Trump campaign rallies a pledge to tear up NAFTA and renegotiate it was held often. He also talked about a 35% tariff on cars made in the Mexico. As a candidate he can say whatever policy he wishes and since he won he likely has to make some inroads into the proposals. One policy is NAFTA or the North America Free Trade Agreement to change will take a long time because similar to all trade agreements there are winners and losers on both sides. No country can be a winner on all sides. In terms of 35% tariff, the auto manufacturers are beginning to speak out against the idea. Mark Fields the CEO of Ford Motor Co said if a tariff of 35% is placed on manufacturers the US economy will suffer. Mr. Fields was speaking before the LA Auto Show, expect more comments as other auto shows around the country are held. Large manufacturers such as Ford often switch jobs between plants and invest factories which the law allows in places which maximums their profits. In the case of small cars where the profit margin is less than trucks, they are made in Mexico. In the case of the trucks such as the F150, the profit margins are much higher and they are made in the US.

The issue is change, the free trade agreements have been in place since the 1980’s which means for the past 30 plus years investments have been made in plants and distribution systems to reflect the agreements. When the President elect Trump suggests everything can be made in the US, the world has passed him by and all those companies which have made investments will want some sort of compensation if the tariff was to be imposed. The plan has been complicated, and more Fortune 500 companies will begin the lobbying not to change or have a long lead time before the change happens. One of the favorite methods to deal with legislation which one does like is to delay it, until people that better understand the issue allow it to die.

Linking to dividend paying stocks, with all new governments senior executives of large and medium sized businesses know some policies are positive, some are negative to the method which they have and expect to deploy their investments. If Ms. Clinton was President, there would have been change at the margin; with President-elect Trump change has to be lobbied to become a non significant method of operations. For the next little while, the senior executives will worry about Washington and what it may or may not do. before worrying about their competitors.

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