News & Views

What a Trump Presidency May Mean for Investment Promotion Agencies


Highly publicized spats with Corporate America have been a frequent occurrence during Present-Elect Donald Trump’s pre-inauguration preparations. Such rhetoric has understandably made investment promotion agencies (IPAs) that recruit from the U.S. concerned about the prospects of foreign direction investment during the next 4-8 years.

Will companies be more reluctant to expand overseas? Even if they do, will they let IPAs promote those decisions? Will additional public comments from the Administration stall projects already in the pipeline? Will existing businesses pack up and head home for good? The answers are complicated and impossible to predict, but we did our best to simplify and prognosticate the near-term future:

Location, Location, Location

Trump’s ire has been toward low-cost locations, specifically Mexico and China as carry-over from his campaign. Unfortunately, those two are likely to see the brunt of any policy changes that occur, but what about others? Those that rate highly as lower-cost business destinations—such as India, the Philippines, Vietnam and Costa Rica—should certainly take a cautious approach and may lose some ability to market relevant success stories to the U.S. audience. But we don’t see the rhetoric extending so far, as Mexico and China involve unique circumstances from a publicity standpoint.

On the flip side, locations that tend to be chosen by companies beyond cost reasons, such as servicing of existing clients, expanding market growth and accessing research or workforce resources (which do include the three above locations, by the way), are likely to be spared the controversy. Europe, in particular, should be more worried about Brexit than Trump.

Manufacturing a Problem

Most of Trump’s efforts (positive and negative) appear to be focused on traditional manufacturing from the heavy industrial sector. Think Carrier, Toyota, Ford and GM. After all, these are the jobs that have been hurt most by automation and outsourcing, particularly in the swing states that Trump carried during the election. The focus of any policy changes is likely to stay there and not extend to technology, energy, logistics, financial and professional services, and the life sciences. The exception would be pharmaceutical companies attempting an inversion, which will no doubt be a hot-button issue as well (and was with the current administration near the end of its term). But overall, companies expanding for the reasons stated in our first point—client service, market growth, and embedded resources—should remain largely safe from scrutiny.

The “Individualist” Exception

News came out Wednesday that Kawasaki was dropping its sponsorship of The Apprentice due to Trump’s connections with the show and his impending presidency. While it’s not an American company, there have been plenty of global corporations doing business in the U.S. that have withdrawn actual or perceived support of the President-Elect in one way or another, a list that includes Wells Fargo, UPS, Motorola Solutions and JPMorgan. There is risk that, when a company makes a stand against what they believe to be wrong, a subsequent backlash from the high office could occur, regardless of industry.

The X Factor

Trump has been as unpredictable as any candidate in memory, which means it’s entirely possible that there are unintended consequences that end up hurting corporations in other industries, rendering our first two points above completely useless. That said, I’d venture a guess that, regardless of your point of view on his cabinet selections, the emphasis on selecting those with business backgrounds wouldn’t overextend policies beyond what is needed to appear tough on this issue for manufacturers (leaving the rest alone).

So, how can IPAs prepare? Besides keeping a pulse on the news and Trump’s Twitter account, we suggest including messaging about any foreign direct investment involving a company conducting significant business in the U.S. that emphasizes the same reasons so many companies expand—client service, market growth, and embedded resources. It’s also possible that expansions rewarding high productivity at certain facilities is another relevant key message to proactively defend against future controversy. It can be hard to avoid getting pulled into a populist-related tug of war that focuses on headlines rather than details, but by being clear and concise on the motivations for investment, that should make any mishaps defendable and swift.

Lastly, it would be wise to have a communications strategy session around how to announce such projects, which include the corporate partner, and combat any negative attention when dealing with a manufacturing company.


Written By

Steve Duncan

Steve Duncan is Vice President of DCI’s lead generation division. Since 2004, Steve has managed marketing programs for a diverse set of city, state and country organizations, from Albuquerque and Houston to Tuscany and Wyoming.

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