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Running Head: IMPACTS OF POLITICAL CHANGES 1

IMPACTS OF POLITICAL CHANGES 2

Recent Political Changes and Their Industry Impacts

Jake Weathersby, Jaylia Kelly, & Kelly White

MGT 6570 - Leadership in A Global Environment

June 19, 2023

Introduction

From the day-to-day lives of people within society to the way a firm conducts its business operations, political forces have a major impact. Political changes and resulting public policy changes are not isolated to the respective country where the change occurs, however, the effects of political forces are felt around the world. That being said, there’s often a negative connotation associated with politics which is not completely representative of political impacts. Political changes can often have good effects that benefit businesses, for example, agricultural trade restrictions that benefit domestic producers of that commodity. Just as climate, topography, and natural resources are important, the political climate of a country that a business operates in is equally as important (Geringer, McNett, & Ball, 2022). Whether it’s a country where leadership changes after a set amount of time or a country where a leader is kept for an extended period of time, the way that firms interact and do business with each other is ever changing. Although there are other factors at play, political change and the subsequent political forces play perhaps the biggest role in such a dynamic market and the impacts on industries, both domestically and internationally.

Impacts on The Retail Industry

The retail industry involves selling products to the end user, whether they be domestic or international. Some retailers in this industry focus on selling “industrial” type items aimed towards use in other industries, such as forestry, where a lot of these items/tools are made from metals. A recent political change that we can analyze is the U.S. Presidency and the changes in the U.S.’s foreign trade policies for steel and aluminum. For companies in the United States that use steel or aluminum in the manufacturing of their products, we can see how political forces impact these manufacturers, the retailers that sell these finished goods, as well as the consumers of these goods. Claiming national security concerns back in 2018, President Trump imposed double-digit tariffs on steel and aluminum imports from key allies including the EU, the UK, South Korea, and Japan (Schropp, 2022). With the election of President Biden in 2020, many expected the trade policies put in place by Trump to be done away with due to the stark differences in their viewpoints, beliefs, and overall ideologies. Biden did remove the steel and aluminum import tariffs on European imports, however, “only at a volume set by historical patterns, through a new system of bilateral tariff rate quotas (TRQs)” (Bown & Russ, 2021). These TRQ’s essentially mean that after the import quota has been reached, the original 25% and 10% tariffs on steel and aluminum, respectively, are applied to all subsequent imports. This was merely a solution to the high costs of steel and aluminum in the U.S., though, due to the low volumes of the quotas.

The effects that we saw as a result of the initial tariffs was an increased cost for steel and aluminum. The TRQ’s were supposed to alleviate some of this increased cost, but due to the low quotas, the TRQ’s just continued this increased cost for manufacturers in the U.S. who use steel and aluminum in the production of their goods. As a result, in the retail industry, we then see increased costs for retailers to acquire these goods, and finally, an increased market price from the retailer that the consumer purchases the goods for. The silver lining, however, is that jobs and domestic manufacturers of steel and aluminum are protected - which was the intention and goal for both the initial tariffs and TRQ’s. Although the goal was obtained, the high prices from both policies question efficiency if government regulation controls the market instead of market forces. The majority of Biden’s trade policy has mirrored Trump’s, by either slightly changing or extending policies set forth by the latter. This demonstrates that political changes don’t always necessarily mean that there will be any substantial change in certain aspects. Sometimes a political change can be ineffective and results in a continued, lasting impact; that of which is still being felt in the retail industry and by both the domestic and international customers of the businesses that operate in the retail industry.

Impacts on the Air Force Industry

In order to preserve national security and project power internationally, the Air Force is essential. However, in addition to being fashioned by military tactics and technical developments, political pressures also substantially impact its activities and capabilities (Johnson, 2019). The Air Force's budget, resources, and operational preparedness are significantly impacted by political choices made at the national and international levels (DEFENSE TECHNICAL INFORMATION CENTER, 2020). This study intends to investigate the effects of current political pressures on the Air Force and analyze how they may affect its operations and long-term growth.

Defense funds are one of the most critical ways politics affect the Air Force. The Air Force's ability to update its tools, create new technologies, and train its people depends on how the money is spent. Recent political events have put pressure on defense spending, which could lead to tighter budgets or even cuts. (Townshend et al., 2019) The Budget Control Act of 2011 and the following sequester measures have limited defense spending, making it hard for the Air Force to modernize. These spending restrictions make it harder for the Air Force to buy new planes, do research and development, and keep its fleet in good shape. It hurts the Air Force's general agility and ability to deal with new threats.

The Air Force acquires and integrates technology based on politics. The Air Force uses stealth aircraft, unmanned aerial systems, and space-based capabilities to maintain air and space dominance. These technologies are acquired and deployed based on military policies and international cooperation. Political factors affect F-35 acquisition (Biggs & Lee, 2018). International alliances, diplomatic connections, and export constraints affect the Air Force's access to essential technology and joint R&D.

Foreign policy and international relations shape the Air Force's worldwide activities and relationships. Joint exercises, multinational operations, and alliances with allies characterize the Air Force's foreign activities. Political choices over military deployments, basing arrangements, and arms control treaties affect the Air Force's capacity to operate in certain areas or react to international crises. Geopolitical events like alliance moves or tensions with adversaries may alter the Air Force's force posture and operational goals. Moltz (2019)

Political factors also influence the military doctrine and tactics of the Air Force. The operational ideas, force structure, and strategic goals of the Air Force are based on the national security strategy and military policy. The Air Force's strategic planning and resource allocation are influenced by political choices about force posture, mission assignments, and operational tempo. The Air Force must adjust its policies and coordinate its capabilities with political goals to confront new threats and changing security issues. The Air Force's concentration changes may be influenced by political factors, such as a greater emphasis on space operations, cyberwarfare, or multi-domain operations (Ertan et al., 2020).

Impacts on the Government Industry

One of the biggest political forces that affect government agencies would be the political changes made by the White House to combat cybercrimes on government agencies internationally and globally. Cybercriminal attacks are increasing more and more each day against all industries of U.S. businesses and government agencies and will continue until stricter consequences are put into play that can deter these situations and bring them to a halt. In 2018, during The Trump Administration, there were at least 20 policy actions discussed to reduce cybercrimes that focused on 5 priority actions. Garcia & Hindocha (2020).

There have been several creative strategies discussed among congress to fight against the actions of cybercriminals, however, there has been a lack of funding to strengthen the training and prosecution of these criminal actors. Even more so, there has been a decrease in momentum along with budget cuts to further along the implementation of a much needed course of action. Many of these cybercriminal acts come from other foreign countries such as China and Russia which makes it harder for the US to extradite and prosecute these offenders. Unfortunately, international relations with certain countries are still uncooperative with each other to establish common laws to prosecute these offenders and the cooperation of these governments are direly imperative in this fight against cybercrime. In recent news, the Bieden Administration announced its strategy to improve cyber security by placing more obligations on the software companies to build their best security applications to aid in the future of small businesses and individuals. Poremba (2023).

Cybercrimes have a significant impact on our government agencies because of the sensitive nature of the data that is withheld by these organizations on a day-to-day basis. For instance, any breach at the MS Department of Revenue of this magnitude could render significant harm against the agency, their employees, and even worse the taxpayer’s information that we are entrusted to protect against any enemy foreign or domestic. Just as an example, the South Carolina Department of Revenue was recently victimized by cyber criminals in whom they breached and exposed approximately 3.6 million social security numbers as well as the credit and debit card information of taxpayers that is withheld by that state agency. Knell (2023).

Any breach of this type of information could be used for economic or political gain against anyone from any citizen of this state, to domestic and international companies that do business within the state, any political or government leader, or any employee that works for the agency. Because of the sensitivity in nature, this information could be used to harm, extract monies, sold to other countries or on the Dark Web, or used as leverage for political influence against any citizen of this state or companies doing business within the state. Any breach could create a serious hardship in financial costs to recover, liability, and distrust of irreparable disproportion to an agency or any individual that could be a casualty, if not deliberate, of its effects.

In summary, political changes and policies impact just about every industry whether it is small or large. It impacts it through trade, sanctions and tariffs, data protection, bureaucracy, tax policy, etc. It affects the long term of businesses and the stability or instability of a country doing business domestically and internationally. Our markets invest and rely heavily on it. Political changes are necessary to ensure the stability of a country. When will we get them right? The world may never know.

Question:

How have recent political changes affected your industry?

References

Biggs, A., & Lee, R. (2018). The Role of the Human Operator in the Third Offset Strategy. Naval War College Review, 71(3), 96–120. https://www.jstor.org/stable/26607068

DEFENSE TECHNICAL INFORMATION CENTER. (2020). Military Trends and the Future of Warfare: The Changing Global Environment and Its Implications for the U.S. Air Force. Apps.dtic.mil. https://apps.dtic.mil/sti/citations/AD1099436

Ertan, A., Floyd, K., Pernik, P., & Stevens, T. (2020). Cyber Threats and NATO 2030: Horizon Scanning and Analysis. https://www.ccdcoe.org/uploads/2020/12/Cyber-Threats-and-NATO-2030_Horizon-Scanning-and-Analysis.pdf#page=158

Johnson, J. (2019). Artificial intelligence & future warfare: implications for international security. Defense & Security Analysis, 35(2), 147–169. https://doi.org/10.1080/14751798.2019.1600800

Moltz, J. C. (2019). The Changing Dynamics of Twenty-First-Century Space Power on JSTOR. Jstor.org. https://www.jstor.org/stable/26623076

Townshend, A., Thomas-Noone, B., & Steward, M. (2019). Averting Crisis: American Strategy, Military Spending and Collective Defence in the Indo-Pacific. In Google Books. United States Studies Centre at the University of Sydney. https://books.google.co.ke/books?hl=en&lr=&id=TBAxEAAAQBAJ&oi=fnd&pg=PA1&dq=The+Budget+Control+Act+of+2011+and+subsequent+sequestration+measures+have+limited+defense+spending

Garcia, M., & Hindocha, A. (2020). Where Are We Now?: Examining the Trump Administration’s Efforts to Combat Cybercrime. Third Way. http://www.jstor.org/stable/resrep25042

Poremba, S (2023, May 9). The Biden Administration’s 2023 Cybersecurity Strategy. Security Intelligence. https://securityintelligence.com/articles/the-biden-administrations-2023-cybersecurity-strategy/

Knell, N (2023). South Carolina Breach Compromises Millions of Records. Government Technology. https://www.govtech.com/security/south-carolina-breach-compromises-records.html#:~:text

Greinger, J.M., McNett, J.M., and Ball, D.A. (2023). International Business, 3rd Edition. New York: McGraw-Hill.

Schropp, Simon. (2022). Biden and Trade: No Trade Policy, No-Trade Policy or Both?. Intereconomics, 57(6), 399-400. https://www.intereconomics.eu/contents/year/2022/number/6/article/biden-and-trade-no-trade-policy-no-trade-policy-or-both.html

Bown, C.P., Russ, Kaydee. (2021). Biden and Europe remove Trump’s steel and aluminum tariffs, but it’s not free trade. Peterson Institute for International Economics. https://www.piie.com/blogs/trade-and-investment-policy-watch/biden-and-europe-remove-trumps-steel-and-aluminum-tariffs