Impact of a Trump win

Buried in our rush to a long weekend is the US Presidential election next week. As we visit our departed loved ones, we have to be reminded that those in their final resting places never witnessed a US election as divisive, toxic and concerning as the one that is obtaining today.   

The question now is, should we care? Absolutely. Though in the other side of the hemisphere, the political realities in the USA affect us a lot in the country. Being the world’s largest economy, though this is their domestic affair and the American citizens (whether for Harris or Trump) might even say, it is none of our business, the concerning reality is, certain sectors, depending on who wins, will be affected.     

On one hand, in a Harris win, expect a status quo. On the other hand, a Trump win could mean a bane in our business process outsourcing (BPO) or knowledge process outsourcing (KPO). Lest we might forget, one of Trump’s favorite slogans is “America first.” As the slogan suggests, it talks about foreign policy. To some extent, it could mean “insourcing” (as opposed to outsourcing) or bringing jobs back to the USA.   

Seriously, if he wins and does that, our outsourcing industry (both BPOs and KPOs) might be in peril. Unlike American-owned manufacturing plants (with billions or millions of capital expenditures in permanent structures) that have been here for years, it is easy to uproot and transfer BPO and KPO operations back to the USA. Moreover, Trump promised to cut the corporate income tax rate if he wins. Precariously for us, to please his supporters, he may encourage investors to bring back jobs to the USA by offering even more incentives. 

Notably, the London-based think tank Capital Economics said in 2016 (as Trump won), that the Philippines stands to be the biggest loser in Asia if US President Donald Trump pushes through with his threat to punish American firms outsourcing jobs. 

Then, we did agree to this observation. Why? One of the major contributors to our economy then was the IT-business process outsourcing (IT-BPO) industry.  Buoyed largely by the continuously growing demand for its services from the global offshoring industry (particularly, in the voice and non-voice sectors, healthcare information management, global in-house centers, as well as, gaming and animation), it raised its trajectory further upward at a pace no other industry came close behind.  In fact, if the trend continues, some economists and industry players believe that the IT-BPO industry shall surpass the remittances of the overseas Filipino Workers (OFWs) in due time.

The recent report of the reputable Nomura Global Markets Research confirmed this. It said that the “Philippines is considered the most vulnerable among ASEAN nations due to the country’s close ties with the US and its reliance on the American market.”  Why? As Trump is expected to revive the same thing he did in his first term. 

Moreover, it said that Trump plans to tighten the US immigration policy (just like before). “By the same token, remittances growth also slowed during Trump’s (first term), suggesting that a tightening in US immigration policy might affect workers’ remittances from the US which are even more sizable,” it added.

That insourcing or bringing back jobs to America will affect BPO revenues is a fact.  According to Nomura, such was the case during Trump’s first term as “services exports growth to the US halved to 5.1 percent from 2017 to 2019 compared to prior years.” 

Obviously, therefore, if President Trump make true his threat of bringing back outsourced jobs to the USA (as he did during his first term), this industry will certainly suffer. Considering the significance of its contribution, logically, the country’s economy will be badly hit. 

Notably, according to Nomura that if these risks (resulting to slowing down of BPOs and remittances if he wins) materialize, the country’s “gross domestic product (GDP) growth could lower by 0.2 percentage points.”

If these risks, indeed, materialize, we can find some solace in the fact that our economy is expected to grow by 6.1% in 2025. However, the truth remains that some of the employees in the outsourcing industry will be directly hit.

Lastly, the most concerning of all are the skirmishes at the West Philippine Sea. With Trump’s adoration towards dictators, will the USA protect us from China’s future aggression?  Lest we forget, not long ago, he encouraged Putin to attack any NATO country (that doesn’t spend a minimum of 2% of its GDP on defense). 

Are we spending that much in our defense? Alarming, isn’t it?