How Trump’s Policies Can Affect Technology Markets

Every day you see more about Trump’s presidency as his staff and cabinet selections start to take shape. One factor that has been very difficult to discuss is technology. Trump mostly shied away from the industry during the campaign, so many of the nuances of his approach to the sector are hard to predict. Despite that, plenty of his larger platforms will still heavily impact technology. So, taking those into account, this is what you can expect from the major players.

Apple

Apple is always in the spotlight in any technology discussion, and there is no reason for that to change. There are two fronts that will heavily impact Apple: manufacturing and foreign holdings. Trump is determined to bring more manufacturing back to the U.S., and Apple is among his targets.

Since the election, there have been widespread rumors of Apple moving some of its production to domestic facilities. Ultimately, even with Trump’s proposals, a large portion of the tech will still need to be imported. Many components will still be more affordable to import from Malaysia, but additional assembly could be moved to the U.S. Either way, the changes are likely to drive up prices.

In the case of Apple, manufacturing is actually a smaller deal. What matters more is the $200 billion they have in foreign assets. Trump wants to enable large companies like Apple to repatriate their cash, and he’s pushing for a 10 percent tax to replace the current 35 percent rate.

While this probably wouldn’t incentivize Apple to move the whole sum, billions of dollars will easily come back into the U.S., and the results would unquestionably spurn economic increases. Apple has already made public statements on the matter, and there is no question that they would prefer to put a big chunk of their holdings back into this country.

Imports

A lot of gadgets in America come from overseas. Samsung is an excellent example. If Trump is able to go through with his massive tariff hikes, you can expect imports to drop dramatically. This will push a lot of American cash into domestic technology, but it also leaves a lot up in the air.

Samsung and other major players can certainly afford hefty tariffs, but the price increase will likely push their American targeted products into the luxury range.

A bigger issue is with components, especially semiconductors. Even when devices are assembled here, most of the components are still manufactured in Southeast Asia.

It’s hard to predict just how Trump’s policies will ultimately impact costs. Regardless, the demand for these products isn’t likely to drop, so the biggest winners will be the companies that can efficiently move their production lines.

Telecommunications

Trump hasn’t said much about tech industries as a whole, but his few major vocal points have been in regards to major mergers and Net Neutrality. The notable merger, between AT&T and Time Warner, sparked a harsh rebuke. Trump promised to prevent such a merger from happening.

While he may not be legally able to keep that promise, it makes clear that he will take a harsh stance against monopolies. This is a vitally important change for American telecom. Government regulators have been lax in enforcing non-competitive practices from the largest providers. If Trump can shake this stagnation, it could mean a long overdue boost in communications infrastructure and performance.

On the other end of the discussion is Net Neutrality. The premise was touted as important for keeping the internet free, and indeed those points of the argument are important. The internet has been the best example of completely free markets the world has ever seen, and many businesses have profited. In fact, the global economy has benefited from the freedom of online markets.

Unfortunately, the actual legislation pushed under the claims of Net Neutrality did not accomplish these aims. It simply listed internet as a utility and subjected it to FCC regulation.

Whether Trump will push to fully repeal this legislation or just edit it into something more functional remains to be seen, but as things stand, Net Neutrality laws have pushed internet providers into unprecedented levels of stagnation. At least minimal reform is necessary.

Silicon Valley

The biggest voices in Silicon Valley harshly and vociferously fought against a Trump presidency. Many of his statements and policies are at odds with the progressive agenda that they often push, but ironically, most of Trump’s policies will directly benefit this sector.

All of the tax structure changes and investment reform are intended to free up cash for the largest companies, and Silicon Valley is home to a number of them. Many of the strongest technology companies are going to thrive under Trump’s presidency, despite the complaining they are likely to do along the way.

Regards,

Ethan Warrick
Editor
Wealth Authority


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