Obama's Affect on International Business

In the coming months a new president will take office and an old president will leave the white house. As George Bush leaves, his administration will take with them their policies on the war, taxes, and most importantly (as it pertains to International Business) their policies on outsourcing. Outsourcing is a necessary part of the global economy. For companies to produce cheaper and cut costs, they will find cheaper resources in other countries. Resources that companies generally outsource for are materials, services, and labor. When a company outsources there are positive effects and negative effects. The company will see more profits by cutting costs. The company will be able to price their product more competitively and sometimes create a better, higher quality product. The negative effect of outsourcing is the loss of jobs. When a GM closes a plant in Michigan and opens one in Mexico, 10,000 Mexicans might have a new job, but 10,000 Americans are out of a job. Barack Obama is highly opposed to this scenario. He believes that American based companies need to stop outsourcing jobs to other countries. Barack Obama will most likely place punitive taxes on American companies that plan on outsourcing their labor to other countries. Obama will also most likely provide tax cuts to American companies that keep jobs in America.

Under the George Bush administration, the American steel companies have just about disappeared due to the cheaper Japanese steel and the lack of trade barriers imposed by President Bush. When Barack Obama assumes office, he will most likely impose tariffs on foreign imports that pose a significant challenge to American businesses. Obama will most likely use other form of trade barriers to make it harder and more expensive for foreign companies to import their products.

In the Boeing vs. Air Bus case, the underlying issue was who was going to receive the new U.S. government contract to build some new military aircraft. The case is still in the federal courts. If John McCain was elected president, Air Bus would have been most likely awarded the government contract. However, Barack Obama will be the next president; he will most likely award the contract to Boeing. Under Obama’s presidency there will definitely be some changes to how American companies do business abroad, and how foreign companies due business in America.