According to an article in the Washington Post, the United States exported $56 billion worth of goods to Britain last year, but that number is dwarfed by the $588 billion in U.S. investment there, in sectors ranging from banking to manufacturing to real estate.
But how does the UK leaving the EU affect businesses in the US?
The heavy-equipment giant Caterpillar exemplifies the dilemma facing American businesses in Britain and the potential ripple effects of the referendum…More than 55 years ago, it opened its first facility in Britain, and now Caterpillar has 9,000 employees and 16 plants there making equipment, such as backhoe loaders and mini hydraulic excavators.
Much of that production is exported throughout Europe and other parts of the world, eased by the E.U.'s open market and standing trade agreements. A Brexit would undermine an economic alliance that the company has called "fundamental" to its business: Roughly a quarter of Caterpillar's sales and revenue comes from its European business…
Any agreements signed by the United Kingdom while they were members of the European Union become null and void when they part ways. That’s understandable, but can’t Britain simply sign a new trade agreement with America?
President Obama warned that the UK would be at the “back of the queue” in any trade deal with the US if the country chose to leave the EU… “And on that matter, for example, I think it’s fair to say that maybe some point down the line there might be a UK-US trade agreement, but it’s not going to happen any time soon because our focus is in negotiating with a big bloc, the European Union, to get a trade agreement done”.
What does this mean to small business in the United States?
Free trade agreements are important for small businesses because they simplify the process of doing business with the partnering countries…Under the North American Free Trade Agreement (NAFTA) I can ship a widget that was made in the US to Canada without paying a duty to the Canadian government. If NAFTA did not exist, then I’d have to pay a duty on the widget upon it entering Canada. This will make my product more expensive to the Canadian buyer.
All US businesses that import and export with the UK are potentially in financial trouble, and those problems trickle down to everyone else. You may not buy and sell abroad, but your vendors and suppliers might; resulting in higher costs to you.
There is small business in Vancouver, WA that makes one particular medical product that they have worked on for years to be able to sell it to the US government for military use. After successfully selling to our government, they started to sell their product in other countries. It is a long process, and can literally take years to get a contract signed. It’s not like selling to an individual or a business; there is a lot more “red tape” involved. Now imagine what the UK leaving the EU has done to the efforts that this company has worked so hard for. According to what you have read, how long will it be until they are able to retry and establish trade agreements with England?
That’s just one company.
April Salsbury, MBA is a strategist, an analyst, an operational guru, a recognized leader and C-suite global healthcare executive with drive and focus for competitive markets. Co-host of The Business Forum Show and regular contributor to various business journals, she possess multi-functional and multi-national competencies with more than 15 years experience in business and healthcare. Her expertise is in invigorating revenue growth and infusing value of lean practices in growing companies through improvements to cash flow and operations management.
Fueling revenue, growth and profit, Salsbury & Co. is a consultancy firm focused on helping businesses and healthcare organizations achieve excellency. Our specialists have executive experience combined with deep functional expertise to provide our clients with services that drive real impact and results.
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