First Reference company logo

Inside Internal Controls

News and discussion on implementing risk management

machine cogs image

Trump at work, week one

TrumpIn a pre–inaugural piece on the new Trump administration, we examined how the new president’s promises (and those of the GOP majority in Congress) might affect U.S. business, its labour market and by extension foreign companies seeking to do business there.

Recent election analysis in The Atlantic memorably said of Donald Trump that “the press takes him literally, but not seriously; his supporters take him seriously, but not literally.” The first week of Trump’s administration has revealed a highly activist White House, hewing with surprising fidelity to campaign promises. The pace of change is materially faster than anticipated and the implications may be felt sooner rather than later.

Among the early decisions were these:

  • The threatened imposition of a 20% tariff on Mexican goods, to “pay for the wall” would have overwhelming implications for any company importing materials, parts or completed goods from Mexico. This in turn would affect any American enterprise dependent on those things, as prices would presumably have to go up 20% to offset the tariff.
  • At the same time, President Trump nullified the Obama Administration’s position on the Keystone XL pipeline – a major “win” for the Alberta oil sector’s export prospects.
  • The United States officially departed the Trans Pacific Partnership (“TPP”).  Opinions differ on the long term implications of this but the vacuum left by the U.S. would appear to be an opening for China to expand its multilateral trade opportunities.
  • The President has also criticized NAFTA. For a more expansive look at the trade implications of the Trump Administration’s first week, readers can listen to Gowling WLG partner Richard Dearden’s January 26th interview with BNN.

The Trump Administration’s approach to the U.S. civil service is highly significant, but somewhat underreported in the flurry of orders and announcements:

  • Of major interest is the President’s order that all departments and agencies of the U.S. Federal Government (other than the military, national security, “health” and public safety) cease hiring. No organization can long sustain operations without fresh personnel. Even the Republican–leaning “Red State” website calls this costly and inefficient, insofar as senior personnel will soon have to do the work of the people they cannot hire.
  • Similarly the President’s order that the Environmental Protection Agency (EPA) cease granting money or entering into contracts. Such an order essentially paralyzes the decision-making of an agency and all of the outside parties which ordinarily engage with it. This is a difficult environment for third parties to do business in.
  • On January 5th House Republicans passed a revival of the 1876 “Holman Rule” which allows for any spending legislation to dictate salary reductions for current Federal employees.  If employed, the Holman Rule significantly weakens job and pay security for civil servants; it also permits the targeting of individual civil servants, as opposed to departments or groups. This kind of action would likely be deemed “constructive dismissal” in a normal employment context.
  • The White House entered into noisy public spats with the press about a seemingly unimportant issue (the size of the crowd at the Inaugural). The National Park Service was reportedly ordered to produce photographic evidence consistent with the President’s opinion, which is an unusual use of a federal agency for political purposes. At the same time, the National Parks Service was ordered to be publicly silent about policy issues. The immediate effect of this was to spawn “unofficial” online sites operated by civil servants on their own time.

Most controversially, on January 27, 2017 President Trump signed an Executive Order imposing restrictions on immigration from select Muslim–majority countries and barring new refugees entry into the United States. Aside from national and worldwide protests, the move spawned chaos and confusion at airports and other ports of entry. Although a New York State judge quickly declared parts of the Executive Order unlawful, the Trump Administration may not be complying with the court’s order. As a result, different enforcement practices arose from site to site—some complying with the court, some not. Any company employing affected foreign nationals in the U.S. is wise not only to get detailed guidance on the law but also to check practices at various airports to optimize chances of re–entry to the country.

The prevailing thrust of Trump’s first week in office is an aggressive shift towards border protection and job protection—as promised during the campaign and the inaugural address. Coupled with an equally aggressive posture towards the U.S. civil service, Week One of the Trump Administration augers significant change. It appears they mean to be taken literally, as well as seriously.

By: David K. Law, Gowling WLG International Limited

Occasional Contributors

In addition to our regular guest bloggers, Inside Internal Controls blog published by First Reference, provides occasional guest post opportunities from various subject matter experts on the topics of risk management and best practices in finance and accounting, information technology, environmental issues, corporate governance, sales/marketing and operations, not-for-profits and business related issues in Canada. If you are a subject matter expert and would like to become an occasional blogger, please contact Yosie Saint-Cyr at editor@firstreference.com. If you liked this post and would like to subscribe to Inside Internal Controls blog click here.

Latest posts by Occasional Contributors (see all)

Send to Kindle

, , , , , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload CAPTCHA.