The Real Economy

A monthly publication for middle market business leaders

U.S. Trade Policy: Rising Risks, Delayed Timetables

The Real Economy: U.S. Trade Policy: Rising Risks, Delayed Timetables

The April edition of RSM’s monthly publication, The Real Economy, features outlook from Joe Brusuelas, the firm’s chief economist, on the impact of United States trade policy with its rising risks and delayed timetable.

While the year began with an opportunistic outlook on trade, things have quickly changed as we’ve seen delays in trade policy and disruptions. Two of the largest factors in the diminished outlook are the lack of passage of the North American Free Trade Agreement and the continued trade spat with China. During recent days, tensions escalated as the United States raised tariffs to 25% on $200 billion worth of Chinese exports, China responded by announcing tariffs on $60 billion worth of United States goods effective June 1, 2019. Meanwhile, it’s possible the White House may choose to open a new front around auto imports from the U.K., Europe, and Asia. These factors make it likely that U.S. growth in the first half of the year will track below the long-term trend of 1.8 percent.

It is critical that businesses, especially those with exposure to auto manufacturing, take steps to stress test their balance sheets and protect against further disruptions to regional and global supply chains.

Internal audit should assess management’s strategy to addressing these risks. Some questions for management may include:

  • How has the company assessed its global footprint in determining the direct and indirect impact of ongoing trade disputes?
  • Where is the company most at risk if trade disputes continue?
  • Have we explored ways to mitigate ongoing tariffs and trade disputes, i.e., supply chain restructuring, manufacturing alternatives, logistical and cost analysis, transfer pricing ramifications or tax considerations?

Internal audit can play an important role in assessing management’s strategies related to trade exposure and for communicating risks to management and the board.

For a deeper dive into these issues, download April’s issue of The Real Economy.

Download the full issue now.

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About The Real Economy

The U.S. middle market makes up one-third of the country’s economy and employs one-third of its workforce, yet this economic growth engine is often overlooked. As the leading provider of assurance, tax and consulting services to middle market businesses, RSM wants to change the conversation.

The Real Economy is a monthly publication to help the middle market anticipate and address the unique issues and challenges facing their businesses and the industries in which they operate. Written by our chief economist, Joe Brusuelas, and including the insights of professionals throughout the firm, The Real Economy is RSM's answer to making sure the unique needs and opportunities of this important segment of our economy are given the attention they deserve.​​​​​​​