Editor’s note: Geoff Woollacott is Senior Strategy Consultant & Principal Analyst and Joey Cresta, Public Sector Analyst at Technology Business Research. This is the first of three parts.

HAMPTON, N.H. – In press parlance, the president-elect appears to be “walking back” from some of the rhetorical excesses of his campaign. Trump’s Cabinet selections include several very conventional picks and some seemingly disruptive ones. The selections provide us some indication of what a Trump presidency will bring for the economy in general and the government IT market specifically, and some indications of where true, transformative technology-enabling public and private partnerships could materialize should Trump be capable of refining “the art of the deal” for public sector activities.

Lower tax rates and more protectionist trade policies

United States Department of the Treasury Secretary nominee Steven Mnuchin and United States Department of Commerce Secretary nominee Wilbur Ross made it very clear they intend to cut corporate taxes and return possibly trillions of dollars held overseas by domestic firms to the U.S. to spur sustained gross domestic product growth rates between 3% and 4%. Ross, who worked for years restructuring struggling businesses in industries such as steel, coal, telecommunications and textiles, signaled a desire to reopen U.S. trade agreements to seek a more “protectionist” stance. Macroeconomic policy shifts contain many offsetting implications to consider both for technology consumers and the industry itself.

  • Reduced corporate tax rates raise the current ROI estimates of corporate strategists across all industries. Technology-led business transformation initiatives around topics such as cognitive, digital marketing, and Internet of Things (IoT)-enablement should accelerate if the Trump administration successfully alters current tax laws.
  • For the technology industry, lower corporate tax rates and easier repatriation of overseas cash assets could spur new business ventures following the asset-lite business models successful in digital ventures. At the very least, it should spur more rapid “string of pearls” or tuck-in acquisitions of small technology startups by larger technology enterprises.
  • More restrictive trade policies and tighter immigration laws can slow economic growth. Global trade has multiple offsetting impacts. Jobs may return to the U.S., for example, but inflation may spike given the higher prices resulting from import tariffs on popular consumer goods. Other nations importing technology could impose retaliatory tariffs should some of the president-elect’s more draconian stump statements come to pass.
  • Import tariffs are not without merit. While tariffs rarely seem to revitalize ailing industry sectors, they have proved useful when nations see strategic value in protecting nascent industry sectors to provide startup operations time to gain economies of scale. President Reagan’s tariffs on semiconductors in the 1980s did not work to protect that segment. A tariff today on alternative energy goods such as wind turbines or solar panels, on the other hand, might work to build a manufacturing base in the United States.
  • Import tariffs have the potential to increase the tension in U.S. international relations, regardless of who Trump taps for secretary of state. Always at the forefront of IT decision maker concerns, security will remain a high-demand capability and an ongoing concern for commercial enterprise and the public sector regardless of what the Trump administration proposes.

Part Two: Federal IT spending implications under a Trump administration 

(C) TBR