Uncertainty ahead for the beverage industry in Trump’s new America?
Donald Trump’s inauguration as President of the United States signals the beginning of a period of uncertainty for the beverage industry.
Donald Trump’s inauguration as the 45th President of the United States of America (POTUS) on Friday 20th January marks the beginning of a period of uncertainty that leaves markets jittery and people more so. What a Trump presidency will entail, and how this affects the future prospects of the United States and the global community, still poses more questions than clear answers.
Partly as a result of a campaign defined by vitriol and back-and-forth name-calling, the clarity of Trump’s political intentions are very much clouded, with the populist Mexican border wall and threats to impose steep tariffs on imports from suspected currency manipulators dominating the headlines, leaving many industries in a lurch. Unable to rely on projections made before the election period anymore due to the upheaval caused in both domestic and international markets, industry players are keeping their cards close to their chest, delaying until President Trump can make his first moves.
One of the key areas of focus for elements of the beverage industry going forward will be how the Sugar Tax will fare. While beginning to take hold in West Europe, it was still very much in its infancy in the US in 2016. At the beginning of the year, Berkeley, California was the only city to have implemented the tax, but throughout 2016 six more jurisdictions either voted democratically or had city officials approve taxes on sugary drinks.
After Trump’s shock win, 2017 could see the emergency brakes applied to further legislation. While the Obama Presidency saw a keen emphasis on healthy living, Trump shows no signs of treating this as a priority, so any momentum for the sugar tax will need to be generated on a more local level, where city jurisdiction decides whether to implement the taxation or not.
However the new administration, and the new direction it will take, has potential to embolden the American Beverage Association (ABA), which fought hard in 2016 to protect the companies most affected by what it believes to be an ineffective and unfair tax. Trump’s victory provided a strong boost to the organisation, as from its circle of friends and supporters the ABA can boast a route towards the President himself. As part of his Presidential Transition Team, Trump has recruited Michael K Torrey, a lobbyist at the head of a firm that works with the ABA to promote their interests in Washington DC. Despite Trump’s campaign rhetoric to ‘Drain the Swamp’ and clear Washington from the corrupting influence of big business and lobbying, he has surrounded his team with those who would look to capitalise on the opportunity to put their business interests direct to the Republican controlled Congress.
The long-term effects on the beverage industry in the United States are markedly unclear. With the strong potential for economic upheaval, currency fluctuations will occur for most markets linked to the US due to the widespread influence of the US dollar, and this could harm imports to America, especially from more exposed countries such as Mexico. Yet, as a positive, Trump made his position clear that he would be a strong supporter of American business and industry, and therefore the domestic beverage market may see strong benefits from a more inward looking administration. What this tells us is unfortunately more assumption and conjecture, rather than cold hard facts, but in a fitting tribute to the beginning of Donald Trump’s reign as POTUS, we have little of the latter.