The U.S. Election Is Over. What’s Next for YOUR International Business?

Dan Harris

Good morning. Good afternoon and good evening, everyone. we are here. Five of us lawyers to in various areas of practice to talk about how we see the second Trump administration impacting international businesses. the format of today will be that each of us will speak for 3 to 4 minutes on our area of expertise. and, then we are going to open this up for questions.

The key here is really going to be your questions. You have already are there are more than 100 of you out there, and you have already armed us with about 25 questions. But I urge everyone to keep pestering us with questions. I believe there’s a way for you to do so. just write demand, man. We will see them.

And, the questions you have, ask them, the questions that you asked during this will, be prioritized. So without further ado, let us begin, and I’m going to turn it over to our first speaker. It’s Adams. Lee Adams is an international trade lawyer whose practice centers on imports and exports, tariffs and duties, trade and trade, sanctions impacting countries and individuals.

Adams heads up our international trade practice. And, obviously he’s going to have a lot of relevant things to talk about. And I’m going to turn it over now to Adams.

 

Adams Lee

Appreciate it. Deja vu all over again. Eight years ago, Trump had just been elected, and I and many others were doubting whether he’d actually impose any of the tariffs he talked about during the campaign. But he sure did. Today, his original tariffs are still in place, but now he wants to impose an exponentially larger set of tariffs. We’re talking trillions, not just billions of dollars of trade value affected.

His proposed tariffs still seem like a terrible idea. But now most people don’t think he’s bluffing. So what kind of tariffs are we talking about here for China? He’s talking about 60% on all Chinese imports, not just some. Like last time. He also wants to impose ten or maybe even 20% tariffs on all imports from all countries. He’s also singled out Mexico.

He said 25% on everything or 200% on Mexican cars. Last time he singled out steel, aluminum, solar. Who knows why the industry might single out this time? Anything and everything outside of the United States is a potential tariff target. So what did we learn from the first round of tariffs? What kind of roadmap can we see for the second round?

First what’s covered. First, we have to see what products get hit with the tariffs and which tariffs might be lucky enough to avoid them. He did say all products, but it still seems more likely than not that it will still be just be some or a lot more than before. The other thing is last time there was a process to for people to ask for an exclusion from the tariffs.

They could say there weren’t any U.S. suppliers of the products. So that’s why the Chinese imports needed to come in. Hopefully this time the exclusion process will be a little more transparent and will grant more than a handful of exclusions. Next, what happens do you have if your products are definitely covered? Last time, a lot of companies decide to shift their production and sourcing out of China and into another country, usually somewhere in the Southeast Asia.

They found legal ways to change the country of origin of their products, depending on the products and their production process. Companies were still able to use Chinese parts as long as they could further process them enough in Vietnam or whatever country, so that they were substantially transformed into a new product and thus get a new country of origin.

So even if Trump imposes tariffs on imports from all other countries, the 10 to 20% tariff will still probably be less than 60% that he imposes on China. Bottom line is tariffs are taxes. They are an import consumption tax. They will most likely be paid by U.S. importers and passed on to the U.S. consumers. The big lie is that they will not be paid by foreign countries or foreign exporters or producers.

They won’t reduce the tariffs. They won’t reduce the trade deficit. They won’t bring back U.S. manufacturing. They won’t solve any Chinese IP issues. They’ll only further increase costs and harm the U.S. and global economy. Like it or not, we’re all getting back on the Trump trade roller coaster. Buckle up. It’s going to be a bumpy ride. Thanks a lot.

 

00:05:36:12 – 00:06:03:07

Dan Harris

Thank you Adam. Our next speaker is Akshat Divatia. Akshat is a business immigration lawyer who primarily assists companies both in the United States and around the world with their U.S. immigration law needs. And Akshat heads up our immigration practice. I’m going to turn it over to you now. Akshat.

 

00:06:03:09 – 00:06:28:19

Akshat Divatia

Thank you. Then, good morning. Good afternoon everybody. Wherever you’re joining us from. undoubtedly, you know, the second Trump administration is going to bring about a sharp change in immigration policy and in particular immigration enforcement. hot off the press. yesterday, Trump appointed Tom Homan, a hardliner as his borders are and even hotter off the press.

This morning he announced that Stephen Miller, he is architect for the first administration immigration policies, is going to be, his deputy chief of staff for policy. So, you know, the agenda that, the administration has planned in the first 100 days is, it’s going to be very aggressive. You can see here, the restrictions on lawful immigration.

So what I’ve identified here are essentially, you know, hot topics that we expect to see action on, very early on. And so the, restrictions on lawful immigration pertains to going after, you know, lawful visa categories, H-1b visas for specialty occupations, L-1 for intra company transfers or ones for extraordinary ability individuals. and, the idea here is that the, the, you know, the, specialty occupation or the definitions will be interpreted very differently and very restrictive, to yield a greater number of denials.

you know, jobs that are at the entry level are also likely to get denied for H-1b status. So an aggressive policy, seeking to drive down the number of H-1b that are approved every year. on top of that, you have the travel bans and vetting. we’ve seen this before as well. And, what that entails essentially is extreme vetting, not just based on countries where the, visitors or the visa holders are trying to come in from, but also based on ideology.

and that is going to be through monitoring of social media. and it will be, you know, a very different scenario than, than it was before, with the, with the visas, with, with the visas at the consulate. going on to rise in investigations and audits. This is also a big priority with, going after unlawful, immigrants, undocumented workers and punishing not just the, worker by putting them in removal proceedings, but also, the employer who hires them.

along with that, you’re going to see that they’re going to be longer processing times, you know, both in terms of, staff reductions and these draconian measures that will be put in place to enforce new policies. you’re going to expect, immigration benefits to take a lot longer. and lastly, you know, the end of birthright citizenship is a very hot topic.

but that, you know, in a nutshell, what that includes is individual roles who are born in the United States to not to undocumented individuals. parents are not going to be eligible for U.S. citizenship. and that could essentially go on to even people who are here as lawful non immigrants, but are not U.S. citizens or green card holders.

So I can answer more questions on that, later on. But thank you.

 

00:09:35:18 – 00:10:15:05

Dan Harris

Hello again everyone. I am here now to talk about how a Trump administration will reshape U.S Asia relations and why that should matter to all of us. First, though, a little bit about me I am an international lawyer who helps companies that operate internationally. Until Covid, my work was largely centered on Asia, which mostly meant China. But in today’s post-Covid world, Asia now comprises only about half of my practice, and I expect to see that continue to decline.

In his previous term, President Trump brought huge shifts to trade and military dynamics across Asia by stepping back from multilateral agreements like the Trans-Pacific partnership, TPP, and instead favoring bilateral deals. He put U.S. interests in the spotlight through high tariffs, tech export controls and aggressive trade policies. President Trump created a new normal in US Asian relations. We can expect these policies under Trump round to not just to return, but to intensify.

Trump previous raised tariffs on China, nearly all of which are still in effect. During the recent election campaign, he repeatedly stated that he would raise tariffs on China to 60% of elected. This would accelerate US-China decoupling, impacting the quality, price and availability of just about everything we buy. At first, I didn’t take Trump’s plans to enact 60% tariffs on Chinese products seriously, but I do now, and I’m not alone.

Trump’s return to office has already prompted many companies to start or speed up plans to move production out of China. I’ve read about these companies, and just last Friday, two companies told me that their plans to move production out of China had taken on increased urgency. Countries like Thailand, Malaysia, Vietnam and India stand to gain the most from this shift.

But here’s the risks that could shake up the entire region. Many companies see a China Taiwan conflict as the biggest threat to their supply chains. A blockade or invasion of Taiwan by China would throw supply chains into chaos, and even factories in places like Thailand. Vietnam could very well struggle to get critical components or to ship their products.

If cross-border transport is disrupted by blockades or by war, the new Trump administration will bring shifting trade patterns, rising costs and escalating geopolitical tensions that could impact the products we buy, the investments we make, and the world we live in. Change is coming, and as always, it won’t impact everyone equally. one thing I’m going to add with respect to what Adam said, I two do not think that the increased tariffs will drive very much manufacturing back to the United States, but I definitely see it driving a lot of manufacturing out of China.

And I am now going to turn the mic over to Fred Rocha. For Fred is a former U.S. diplomat with Latin America and China experience. Fred is now an international lawyer who heads up our Latin America practice and our international IP practice.

 

00:13:38:17 – 00:14:16:10

Fred Rocafort

Thanks to him. Well, when we talk about Latin America in this context, obviously we have to start the conversation by discussing what is likely to happen or what could potentially happen with Mexico. Adams already addressed the issue of tariffs generally, but in his last speech before before the election, Trump announced or reiterated a willingness to impose tariffs on Mexico.

if the country did not, stop the onslaught of criminals and drugs coming into the United States. That’s that’s the the quote, and he, he said that this was a plan that that had, a 100% chance of succeeding because if it, because if it didn’t work, then it would the, the tariffs would be increased to 50%, 75%, 100%.

that’s what he said. pretty much verbatim. Now obviously the the Mexican government will we’ll try to to work with the new administration to, to avoid this fate. And it is possible that some sort of compromise might be reached. whereby the, the Mexico is seen as, as, as doing enough, at the behest of, of of, of Trump and that allows, saves enough face all around to, put off the, the prospect of, of these, you know, these steep tariffs.

But it remains to be seen. Right? I mean, given given the the somewhat fussy nature of of the the requests, you know, stop the onslaught of criminals and drugs. I mean, it is, obviously an incredibly porous border, no doubt that Mexico could do could do more, to control its own borders. both its southern border, and also the border with the US.

But at the same time, that this border has, has been, porous for, for a very long time. And it’s not not that simple. so the bottom line is that the prospect of rather harsh tariffs being imposed on Mexican goods is out there. whether it, it comes to fruition or remains to be seen. But but it is a it’s a real risk.

and that would obviously have, severe consequences for, for U.S, Mexico trade, especially as many companies look at, Mexico as a possible alternative to, to China and other Asian destinations that could open up opportunities for other countries in the region. No country is as well-placed as Mexico to play a complementary role, to to the US, but but nonetheless, we we could see some some countries benefiting from, from an environment in which, let’s say both China and Mexico get hit with, with stiff tariffs.

that could create opportunities, for other countries in the region. however, many of the countries in the region have, might not enjoy the warmest of relationships with, the US under a Trump administration. How much this will impact their ability to, to take advantage of these, potential, tariffs against, I guess Mexico and China remains to be seen.

when we look at countries such as El Salvador and Argentina, where there is, an ideological affinity between their, their leadership with, with a new US leadership, that that could, open the door to some interesting possibilities. In the case of El Salvador, it is a country that is, could be an interesting alternative for, for some manufacturing activities.

At the same time, it’s a relatively small country that would pretty quickly, hit a hit, a limit, to what it can do, what it can produce. So, so it might not be I mean, it’s certainly not going to be the, the next Mexico or let alone the next the next China by itself. And other countries in Central America are not as, don’t have that ideological affinity that I, that I mentioned.

And finally, we can also expect countries, some countries in, in Latin America to, start moving toward or to more, more firmly embed themselves in, the emerging or, world order being led by, by China. Part of this is going to be, an increasing sense of wariness towards the US, doubts about the US’s reliability as a, as a, as a partner.

and also perceptions that the US relevance and even power are waning. And it might be time to, to place bets with, with, with the new emerging emerging powers, you could see these dynamics play out in places like Brazil, Peru, and then even Mexico, even Mexico. Mexico has been, cozying up to to China, over the past, years.

And then this, this, you know, it might be a natural reaction, right? If they’re if they get hit with, with, with new, new tariffs. And in the case of the the bad seeds of the hemisphere, Cuba, Venezuela, Nicaragua, you you we are likely to see a harsher line being taken by Washington, which, could,

result in these countries aligning themselves even more, forcefully with China and Russia. and that could open the door to any number of troubling possibilities for the region. I’ll leave it at that.

 

00:20:26:04 – 00:20:55:04

Dan Harris

Thank you. Fred. Our next speaker is Shannon Brandao. Shannon is an American lawyer with multiple degrees in EU law and business from European universities. She is currently based in Portugal, where she works with our Portuguese attorneys to help foreign companies and individuals with their Portuguese legal matters. She also leads our Europe practice.

00:20:55:06 – 00:21:26:11

Shannon Brandao

Okay thank you Dan. Well, Europe is ready. That’s what the European Parliament said. We don’t know. if that’s, just political speech or if they’re really, really ready for Trump 2.0. I’m here in Portugal, as Dan said, it is 5:00, five after five my time and on the news all you see seems to be commentary on, on, how Donald Trump is going to relate to Europe.

So I’m going to try to give you three areas of, US EU relations that I believe will become sticking points in the future. And that’s really based on his first term. but also things have changed since his first term that make things, a great deal more dicey, erroneous when I’m, say, when I’m talking about, things have changed.

I really mean that, you know, the Russia that Russia has invaded Ukraine and Europe is on edge, and very concerned about its security. So security has become front and center for this region. Number one, the number one sticking point really is going to be, Trump’s approach, Trump’s approach is a nationalist and transactional list foreign policy approach.

And what that means is, he’s going to take a very narrow view. to issues and he’s going to make deals and these deals, maybe disparate deals from larger issues that that might even implicate the deals. So, that leaves Europe feeling apprehensive. doesn’t really know which way. the the ball will roll. but I will give you one example, to take away from from this, potential tension, if you will.

Shannon Brandao

And that is I think it was back in September. the vice president elect, JD Vance, suggests did that the U.S. might consider removing its support from NATO if the EU continued to target social media platforms, and especially Elon Musk’s X? Vance shared concerns about what he said were threats to free speech during an interview where he mentioned that an EU official had sent Musk a letter about, possible arrest for allowing Trump on the platform.

in fact, Musk had been advised by Terry Brett and the former internal market commissioner about the EU’s harmful content rules, which are EU laws on freedom of expression. The EU had already, been warning X on its failure to comply with the Digital Services Act regulations on advertising transparency, account verifications and things like that. And Musk has already been accused here in the EU of suspending accounts of journalists who covered or criticized him.

So, this was a bit of a left hook, if you will, for Europe, for Lance to prevent to link Musk’s troubles to, to NATO, support, is a really, you know, it’s a, it’s it’s something that not a lot of people is going to see coming, but this could very well care to rise Donald Trump’s relationships, with other regions of the world and especially with Europe. So, that that’s left, a bad taste in folks mouth here. the second sticking point that I would talk about is certainly going to have to do with trade. you heard Adam talk about tariffs. Well, those tariffs are going to also apply to and to EU. We’ve got ongoing trade disputes, that that have been well since the first Trump administration on steel and aluminum.

And those, disputes are expected to get worse. in general economic wise, Trump has said or suggested that he will make moves that will impact central banking. That is making Europe nervous, because the implications are that it might weaken the euro against the dollar if his policies are enacted. and his proposals could unsettle U.S financial regulations, which would affect global and which includes European financial stability.

the third and final sticking point I have since this time is really short is definitely security. Trump’s approach, this transactional approach, particularly in light of the ongoing war in Ukraine, is making a lot of folks nervous here. They are reacting, to the unpredictability of Trump’s foreign policy and the potential risks to the region. I’ve noticed, for example, European Commission President Ursula von der Leyen, mentioning, a lot more recently that Europe needs to be able to defend itself now, there’s been talk for years about, an integrated European army.

That’s something that that, folks are taking a greater interest in and have been ever since Putin invaded the Ukraine. But, Present, NATO still is very crucial, obviously, for European defense. and I think that if Trump is wants to revisit that issue of European spending and contributing to NATO, with the threat of pulling the US out or reducing support in some way, I think he’s going to have an easier time, opposed to the Ukraine invasion of getting, countries to meet their spending obligations.

So this is one area where a lot of people, expect a little bit more concession, on Europe’s part. Now, there are countries that are meeting their obligations, and then there are countries that aren’t. And there’s been a lot of talk. It did not start with Trump. There has been talk for years that more money needs to go in.

So, so this is one area where his approach might work. in we’ll just have to see, conclusion. My conclusions are that Trump is going to be, unsettling for Europe. And the tariffs obviously are going to impact Europe. and this linking of disparate issues, if he does that, is really going to, throw them, throw a curveball for us, EU relations.

Thank you.

 

00:28:11:10 – 00:28:49:16

Dan Harris

Thank you. Shannon. And we are now going to be opening it up for questions. so the first question, that we got live is a question that we got many times by, guests before we even began. And that is when do you see the China tariffs going into effect? And how do you see China retaliate? Adams, can you lead off.

 

00:28:49:25 – 00:29:13:12

Adams Lee

It took about two years last time for the China tariffs to actually kick in. So 2018 was when they finally went into effect. This time around. Will they go faster. Yes. But they’ll still probably have to go through some notice and comment period. And so it will probably take at least a year to get get through before the tariffs kick out.

 

00:29:13:14 – 00:29:26:13

Dan Harris

Okay. why don’t you very briefly describe the retaliations that China made to the last tariffs? Because I’m expecting it’ll be similar this time around as well.

 

00:29:26:16 – 00:29:56:20

Adams Lee

The China did retaliate with their own set of tariffs against U.S. exports to China. But China was actually pretty measured. they responded to an equal value of what was imposed on them. China realized that getting it to a tariff war is not healthy for them, because tariffs are really a self-inflicted wound. So they don’t want to get into a huge tariff war of this scale.

 

00:29:56:22 – 00:30:22:15

Adams Lee

That doesn’t help them. So I think they’re going to try to be as measured as possible, like last time. but maybe they’ll be more selective in terms of going after US companies operating in China, as a way to retaliate. So, you know, all possibilities are there for under the Chinese legal system in China to enforce against U.S. interests.

 

00:30:22:17 – 00:30:28:07

Adams Lee

just as the US is looking at us laws to enforce against Chinese imports.

 

00:30:28:09 – 00:31:20:28

Dan Harris

Yeah, that is actually my big fear that China will step up its, bad treatment of Americans and American companies in China as retaliation. Okay. next question. What do you see as the impact of tariffs for items from China imported to Puerto Rico? That’s the question. But we’ve also gotten a lot of other questions, with respect to what happens if Chinese product is sent to Mexico and then shipped to the United States and so I hate to go back to Adams again, but when you talked about how companies could move their production elsewhere, but would need to make sure that they change the country of origin of their product, I’m reminded of

 

00:31:20:28 – 00:31:47:07

Dan Harris

the fact that many people out there, including relatively sophisticated companies, think that by shipping product from China to Mexico and having someone put the product together, there and shipping it to the United States, we’ll clear you of any China tariffs. But that is absolutely not true. So, Adams, could you speak to the Puerto Rico and the Mexico and the everywhere else issue?

 

00:31:47:10 – 00:32:13:01

Adams Lee

Yeah, Puerto Rico is kind of simple and straightforward. Puerto Rico is part of the US customs territory. So if you’re shipping to Puerto Rico, you’re actually already shipping to the United States. So, you know, shipping to Puerto Rico doesn’t really help you change the country of origin. If you go to Mexico, however, you have a shot at creating a Mexico product out of Chinese parts.

 

00:32:13:04 – 00:32:45:26

Adams Lee

But you can’t just simply bring it Chinese parts. Put it in simple assembly, screwdriver, you know, assembly operations that are really basic. that’s not a substantial transformation. So you have to have a fairly sophisticated production process in Mexico to achieve a substantial transformation. And that is not done by it’s a product specific, company specific, industry specific, analysis.

 

00:32:45:26 – 00:33:03:06

Adams Lee

So, it gets pretty complicated. It’s often more art than science in terms of defining where that line is, where a substantial transformation happens. so that’s why it’s pretty complicated to figure that where that line is.

 

00:33:03:08 – 00:33:23:29

Dan Harris

Okay. All right. what will be the Trump administration’s stance toward Latin American mining countries that can provide critical minerals to boost domestic manufacturing in the United States? Fred, what are your views on that?

 

00:33:24:01 – 00:33:55:27

Fred Rocafort

Well, independent of what a specific country offers, to our economy, I think the the first considerations are going to be, top level, ideological considerations. Right? So of course, it could, as always happens, if a country has a product that is needed by American companies, that might impact the way that the relationship with that country is, is handled.

 

00:33:56:00 – 00:34:21:13

Fred Rocafort

and then that would actually, be consistent with, with this, transactional approach that, that we hear about all the time. But at the end of the day, I think what’s really going to matter is, where this where this country, resides in the, in the hierarchy of, of affinity to the to the new administrations.

 

00:34:21:13 – 00:34:56:08

Fred Rocafort

So, it’s just really going to going to depend, if you’re talking about a place, let’s say, like like Argentina, which has obviously a very vibrant, mining sector, at the moment, you, you have the, the ingredients in place for, a very, very close, relationship given with the, the admiration that that has been expressed, by the president of Argentina, towards president elect Trump.

 

00:34:56:10 – 00:35:25:24

Fred Rocafort

not sure, but there might have been complimentary comments going the other way. as well. But it’s important to remember that, one of the, one of the things, that that makes democracy a democracy is the fact that governments can change. Right? So I think for for companies thinking that things are going to be, the, that conditions are going to be favorable in a certain country and not favorable in another country.

 

00:35:25:26 – 00:36:00:16

Fred Rocafort

I think it’s important to keep in mind that, the governments of those countries could could change. We’ve seen this happen in the region, countries that were considered, some of America’s strongest allies in the region have made it onto the, the other list. and that that could happen as well. So I think it’s just it’s going to depend really on, and, it’s it’s going to the impact is going to be determined that on a country by country basis and the overall relationship with, with the US.

 

00:36:00:18 – 00:36:16:05

Dan Harris

Thanks, Fred. quick follow up question for Adams. If you do complete the substantial transformation on the Chinese imported goods and Mexico, will it enter the United States as a Mexican product?

 

00:36:16:07 – 00:36:40:23

Adams Lee

Yes. If you can do that, you can, and if it’s as a Mexican product, you also could get benefits under the USMCA, but that’s a whole other set of, hurdles to jump through, too. So you may get a double bonus if you can bring it in as a Mexican product and, qualify for USMCA benefits as well.

 

00:36:40:25 – 00:36:46:13

Adams Lee

But that’s a tricky that’s a that’s a nice needle to thread if you can achieve that.

 

00:36:46:15 – 00:37:12:23

Dan Harris

Okay. all right. So, Akshat a question for you. what will the Trump administration’s visa, and of other, immigration restrictions mean for people already in the United States here working, visas?

 

00:37:12:25 – 00:37:47:01

Akshat Divatia

Yeah, it’s a question we get a lot. you know, I have already have my visa. if I’m applying for an extension, what does that mean for me? we saw this during the first administration. The, policy was to remove the deference given to prior approvals. In other words, if you have status, when you apply to extend, the government gives deference to that prior approval and doesn’t scrutinize the petition as if it were filed de novo, like for the first time, and that deference is going to go away?

 

00:37:47:01 – 00:38:14:29

Akshat Divatia

We’re pretty sure of that. the officers will be asked to evaluate the evidence all over again. And, what that’s going to result in, essentially are requests for evidence, notices of intent to deny. you know, these are tools that the Immigration Service has to to ask for additional evidence beyond what is supplied. So, you know, what we typically do is we frontload, a lot of the evidence anticipating the issues.

 

00:38:15:01 – 00:38:35:24

Akshat Divatia

there’s, you know, you don’t get a second chance to make a first impression. So that’s definitely, the key thing to keep in mind. And secondly, you know, keep for employers especially, you know, maintain your I-9 files, keep your immigration documentation, make sure that everything is in order, because there won’t be there will be investigations and audits.

 

00:38:35:29 – 00:38:53:03

Akshat Divatia

And you don’t want to scramble simply because you are, disorganized. You don’t want to scramble and have somebody status, extension denied or have to leave the US because of that. So organization and being proactive are the two most important things. And patients.

 

00:38:53:05 – 00:39:29:05

Dan Harris

Okay. All right. so this is definitely the question I am asked most often by clients. and I always find it very difficult to answer, the question is will the true? It’s actually a series of questions. Will the Trump administration change the likelihood of China invading or blockading Taiwan? And between these two scenarios, which do you see as the most likely and how will these to impact supply chains?

 

00:39:29:08 – 00:39:49:18

Dan Harris

And I’m actually going to turn to Shannon to answer this, because even though Shannon is in Europe and focuses a lot on Europe, she’s also fluent in Chinese and used to live in China and deals a lot with China as well, especially the political side. So I’m going to let you lead. I’m going to ask plenty of others as well.

 

00:39:49:21 – 00:39:50:10

Shannon Brandao

Okay.

 

00:39:51:09 – 00:40:19:09

Shannon Brandao

I would say it does increase the chances, but only if Trump does what we all think he’s going to do, which is to make some sort of deal to pressure Ukraine and to surrender to Russia, because that will, if I, I believe that that will embolden Beijing to then set upon Taiwan.

 

00:40:19:12 – 00:40:36:12

Dan Harris

Okay. And how do you see how will a blockade and war or war impact global supply chains? obviously it’ll impact those that are tied to China. but what about other places?

 

00:40:36:17 – 00:41:00:21

Shannon Brandao

What do you remember when we had all that disruption from Covid and all of the, you know, the the backlogs when China. I mean that in my mind that that would pale into in in comparison of what, you know, a conflict or a blockade in the, in the East China Sea and in the South China Sea, might do so.

 

00:41:00:24 – 00:41:27:18

Shannon Brandao

It’s all a ripple effect, isn’t it? and, a blockade, you know, China will then declare them and the over the region and decide what ships get through and what ships don’t get through. And if you think the enemy’s ships, whoever the enemy is, if that’s us or if that’s just Taiwan, well, we don’t know if you think the enemy ships are getting through.

 

00:41:27:19 – 00:41:52:27

Shannon Brandao

Well, no they’re not. You know, Huawei will not like to see competition in the Chinese market from Samsung or from, you know, Apple anymore. So, it it just has a ton of knock on effects. we don’t need a blockade of Taiwan. We don’t want that. No one wants that threat.

 

00:41:52:27 – 00:41:57:01

Dan Harris

What are your views?

 

00:41:57:04 – 00:41:58:12

Fred Rocafort

Well.

 

00:41:58:14 – 00:42:35:08

Fred Rocafort

Although the U.S responds to, increased aggression against Taiwan is obviously an important consideration. I think fundamentally, there are other considerations that are more important from from the point of view. of the Chinese. And those are ultimately going to be the, the key factors, anything any action against Taiwan, is going to be contingent on military factors.

 

00:42:35:10 – 00:43:03:15

Fred Rocafort

there there are very, open questions regarding the the ability of China to, to pull off some of the more ambitious, course of actions against Taiwan. And there are, related political questions. There are questions, that involve the day after in Taiwan, if you if you, embark on these adventures, there are questions as to what happens in China.

 

00:43:03:15 – 00:43:19:17

Fred Rocafort

There are questions as to what happens in the region. So of course, the attitudes prevailing in Washington are, are going to be an important consideration for, for the Chinese going forward. But by no means the, the only, the only ones.

 

00:43:19:20 – 00:43:47:21

Dan Harris

Thank you. What I will add to that is that people often ask me when China is going to blockade or invade Taiwan, and I always tell them, I’ve probably read every article ever written on that, and I still have no idea and don’t believe anyone who puts a date on it. because I don’t think anyone really knows when or even if I want to.

 

00:43:47:26 – 00:44:33:29

Dan Harris

China will do anything with Taiwan. I don’t even think President XI knows. And if he does, he could change his mind on that tomorrow. but one thing I will say is that I do see increasing China Taiwan tensions impacting supply chains, and I think it will impact supply chains well beyond China, not just because China’s supply will supply component parts, but because, I think companies will become very afraid of doing business with countries near China, which I think is a real shame, but that is definitely already happening.

 

00:44:34:02 – 00:45:05:26

Dan Harris

we have clients who are saying, I’m tired of Asia. It’s just too risky. I’m going to Mexico or wherever. just very briefly on Mexico, I think I might be the only optimist in the world out there. I’ve even invested in Mexico stock funds. I think Mexico is going to turn out to be probably the largest beneficiary of the China tariffs.

 

00:45:05:28 – 00:45:31:23

Dan Harris

I think Trump has singled out Mexico because he wants to put the squeeze on them with immigration. I think Mexico’s new president is very savvy and will handle that well. And I see Mexico as really thriving in the next five years. But if I had a company, would I set up a factory in Mexico right now? No, I probably wouldn’t set up a factory anywhere right now.

 

00:45:31:28 – 00:45:45:18

Dan Harris

I’d wait a little bit. Okay. moving on to a, another question here.

 

00:45:45:20 – 00:46:07:23

Dan Harris

We’ve gotten a lot of questions regarding the impact. all of this is going to have on food prices. does anyone want to answer that? Does anyone have a sense for what’s going to happen with food? How will it be different than other products?

 

00:46:07:25 – 00:46:45:29

Adams Lee

Yeah. Now food is a big issue. particularly with Mexico. A lot of our fresh produce is coming from Mexico. and so if Trump wants to go after Mexican products and specifically Mexican fresh produce, that’s going to have a direct impact to drive up, significantly prices for food. that’s vegetables, tomatoes, squash, cucumbers, all of that is in line for a significant increase in price if Trump goes after Mexico or anything food related.

 

00:46:46:02 – 00:47:02:03

Adams Lee

And that would affect the lower middle income people more than, you know, the people with higher incomes. you know, it’s a disproportionate effect, on the lower income. So.

 

00:47:02:05 – 00:47:39:23

Dan Harris

Okay. All right. So here’s a question. could instead of China pushing down hard on US companies in China, could the Chinese government play ball with them to incentivize them? After all, big multinationals having a production presence in China have direct lobbying power with the US government. I love this question because I very proudly reveal that I got this issue not just wrong, but completely 180 degrees wrong.

 

00:47:40:00 – 00:48:09:08

Dan Harris

When Trump instituted the tariffs the first time, I predicted that the Chinese government would crack down hard on American companies and Americans in China, and they did the exact opposite. having been proven wrong once, I’m going to make the exact same prediction again, because I think relations have deteriorated even more. And I don’t see this happening, but anything is possible.

 

00:48:09:15 – 00:48:12:02

Dan Harris

Does anyone want to add to that?

 

00:48:12:05 – 00:48:41:09

Shannon Brandao

I would say I would add that there’s talk about the relationship of of Musk to Beijing and then Musk to Donald Trump, and that there’s talk that there that he may become the new, intermediary between the two. But it’s a very, very tricky and delicate situation. for everyone involved because all of the players are quite mercurial.

 

00:48:41:11 – 00:49:14:09

Shannon Brandao

that’s one, but two. Musk is involved in the in the great space race. You know, he’s got, space-x. He’s got Starlink, which is, helping Ukraine defend itself at present and something that the that China, the People’s Liberation Army has been writing, articles on for the past, I don’t know, six years saying that they want that system and they want if they can’t have the system, they want to do better than that system.

 

00:49:14:11 – 00:49:46:14

Shannon Brandao

They see it as a as a number one, national security objective to, to, to beat him in, in that race if they can’t borrow his system. So these are extremely complex issues. And it comes down to a number of mercurial personalities. but it is possible, you know, that, that he would act, on Beijing’s.

 

00:49:46:16 – 00:50:01:25

Shannon Brandao

I, I shouldn’t say it this way. It is possible that he could be sought out to lobby on behalf of Beijing or vice versa, that Trump will ask him to go to Beijing and ask and press them for something? I think.

 

00:50:01:27 – 00:50:41:18

Dan Harris

Yeah, I guess in some ways it comes down to whether the tariffs are being enacted for political or monetary reasons. and I’m not sure that once they’re enacted, that dividing line will have much meaning, particularly to people in China. But I guess that, remains to be seen. okay, let me pull up another question here.

 

00:50:41:20 – 00:51:11:17

Dan Harris

okay. for the last couple of years, we keep hearing about companies moving their manufacturing out of China or diversifying away from China. Where are you seeing companies moving their manufacturing? And what countries do you see replacing China? Fred, I’ll give you the first crack at this one.

 

00:51:11:19 – 00:51:43:29

Fred Rocafort

Sure. First thing to point out, and this is, a point that’s often made that there never will be a replacement. as such, you cannot replicate what would China represents, in terms of, a manufacturing base that is also connected to the world’s largest consumer market. So ultimately, what alternatives exist is going to depend on, on the specific, a specific business.

 

00:51:44:01 – 00:52:10:04

Fred Rocafort

and whether, you know, whether they want to tap into the China market, etc.. But, we are seeing increased, increasing interest in Mexico, of course. and it’s not only American companies, it’s also Chinese companies that are looking at Mexico as a as a potential springboard to the US market, to the Latin America market and, and Indian companies that are, that are doing that as well.

 

00:52:10:05 – 00:52:43:01

Fred Rocafort

We are seeing increased interest as well in India. Vietnam has has long been a, an alternative to, to China for, for many companies, we do hear very often, concerns about, Vietnam, just not having sufficient capacity for, for, for additional work. in for some, other Southeast Asian countries such as the Philippines, Indonesia, Cambodia, might prove to to be valuable alternatives.

 

00:52:43:01 – 00:53:03:02

Fred Rocafort

We, we see some companies going to Colombia, and other Latin American countries. and you know, again, depending on the product, we see companies going to places in Eastern Europe, etc.. So it just it really depends. It is a mixed bag, but there is no single replacement for China. There never will.

 

00:53:03:05 – 00:53:37:12

Adams Lee

The weird thing about all this is that China, before all the Trump tariffs, was happy to just manufacture in China. These tariffs have pushed China to go explore the world. In fact, the tariffs may actually wind up strengthening China’s position in the world as China spreads out economically around the world to all corners to expand their manufacturing bases, that economic power is going to translate to political power in China may wind up stronger in the world than they were before.

 

00:53:37:12 – 00:53:41:03

Adams Lee

All the tariffs were imposed.

 

00:53:41:05 – 00:54:14:26

Dan Harris

Yeah. And we have certainly been seeing a lot of Chinese companies looking to manufacture in Mexico. we must have been contacted by probably 20 of them, of which I would estimate roughly 19 of them, plan to go into Mexico, in violation of various Mexican and U.S laws when they shipped the product back to the US.

 

00:54:14:28 – 00:54:43:03

Dan Harris

And I suspect those companies are not going to succeed. But what I find very interesting is the fact that some serious Chinese companies have already gone into Mexico, and they’re going to comply with the laws, and they’ll be able to ship product into the United States that are deemed to be made in Mexico. And that is making a lot of people in the Trump administration very unhappy.

 

00:54:43:10 – 00:55:10:10

Dan Harris

And I predict that eventually there will be tariffs put on Chinese owned companies. No matter where they are in the world. You know what? Fred’s nodding yes to that. And I think Shannon was also nodding yes to that. I mean, obviously that’s a possibility. I guess I’ll turn to atoms. How likely is that?

 

00:55:10:13 – 00:55:38:12

Adams Lee

Well, that’s the smart way to fight China is to coordinate with the rest of the world. But Trump is antagonizing the rest of the world just as much as he is at China. So, by pushing the rest of the world away, he’s actually hurting his ability to go after China in the way that probably could or should, restrain the Chinese expansion around the world.

 

00:55:38:12 – 00:55:49:24

Adams Lee

So, should he coordinate with Mexico to try to limit China’s expansion? Yes. Will they? Probably not that that’s the thing.

 

00:55:49:26 – 00:56:20:28

Dan Harris

Right. And a lot of the Mexican lawyers we speak with and work with are saying that Mexico is very cognizant of this problem, as is Vietnam. these countries do not want the United States slapping a 600% tariff on them because Chinese products that are really not Vietnamese products are not Mexican products are coming out of those places.

 

00:56:21:00 – 00:56:30:01

Dan Harris

okay. So turning to you, Shannon, in Europe, where are people going, that are leaving China?

 

00:56:30:04 – 00:56:55:28

Shannon Brandao

they’re going, mostly Eastern Europe. You’ve got a lot of manufacturing going into Poland. Hungary. The Chinese are actually setting up BYD. I think there’s a new a brand new center, billion dollar center in Hungary. Either it’s just an agreement or they started building. I don’t know yet. And when I say divide, that’s the, Chinese, electric vehicle auto automaker.

 

00:56:56:01 – 00:57:24:08

Shannon Brandao

that’s Hungary. they’re going in the Baltic. they’re even coming here in Portugal. we’ve got an auto parts industry. And which government has been trying to attract new industries here? a lot of countries in Europe are very aware of the, the. Well, I mean, Brussels is talking about diversification all the time. And so some they have to, you know, the companies have to go somewhere, whether they’re U.S. companies or European companies or Japanese companies.

 

00:57:24:10 – 00:57:48:19

Shannon Brandao

So there are a number of EU member states that are intentionally, you know, working really hard to try to attract, business with new tax, incentives or, just immigration incentives. what have you. so it’s a it’s an interesting time. It’s a it’s there’s the immigration laws here in Europe, for example, are constantly changing to reflect the, the new situation.

00:57:48:21 – 00:58:14:01

Shannon Brandao

that’s on the ground. And so the laws, they’re, they’re volatile in a, in a kind of, in a good way and not necessarily in a bad way. there’s just a lot of activity. They stay kind of the same for a very long period of time. And then after, after Putin invaded Ukraine, there was a, an enormous amount of pressure put on the member states to do something to limit and control and better vet people.

00:58:14:01 – 00:58:38:08

Shannon Brandao

So that led to a lot of migration, law changes. But on top of that, they’re there. Also, they use migration to attract, economic investment. And so, they want a piece of the pie. So if you’re interested in coming to Europe, let us know. there’s, there are, you know, different deals happening at different times. We can look into it for you.

00:58:38:10 – 00:58:52:19

Dan Harris

Okay. So we have gotten a shockingly large number of questions regarding US-Canada, relations.

00:58:52:22 – 00:59:27:08

Dan Harris

What are your views on that? I guess what I will say is I’ll mention what Adam’s mentioned, which is that, in Under Trump one, I was disappointed with the fact that President Trump seemed to view Canada as an enemy almost equivalent to China, because I certainly do not see them that way. especially since my youngest daughter will soon be marrying a Canadian.

00:59:27:10 – 00:59:36:27

Dan Harris

But, what is it? What is everyone else’s views on, what’s going to happen there?

00:59:36:29 – 00:59:57:15

Adams Lee

Trump is a bully and everyone is a bully target. Even his closest friends are bully targets. So Canada, even though they’re probably our closest trading partner, they’re going to get hit just like everyone else. Maybe not as hard as not as much as others, but they’re going to get hit.

00:59:57:17 – 01:00:05:19

Dan Harris

And so that also answers the third issue. We should expect rising prices in maple syrup.

01:0:10:03 – 01:00:38:13

Dan Harris

Okay, let me pull up some more questions here. Who? Oh, I’m sorry, this is, actually in the. Our time is up. we thank everybody for attending. I should have mentioned this sooner. There is a recording of this somewhere. just write us and we’ll tell you where once it goes live. Or you can check our various websites and and find out.

01:00:38:16 – 01:01:04:16

Dan Harris

And if anyone has any additional questions or questions that were not answered here. send them to us. And, we will gather up all the unanswered questions and do a quick blog post where we briefly answer them. So thank you, everybody. and goodbye.

01:01:04:18 – 01:01:17:26

Shannon Brandao

Thank you very.