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Poor Global Reputation Could Put U.S. Exports at Risk

An American flag waves in the foreground at this US port, where a cargo ship loaded with containers is berthed beneath giant cranes on a clear blue sky day. The results of a recent Pew Research Center survey on the reputation of President Donald Trump and the United States in 37 countries revealed that favorable global attitudes toward America have declined. In light of that, three professors in Drexel University’s LeBow College of Business warn that a weakened global reputation for the U.S. could put billions of U.S. exports at risk.

Daniel Korchun, PhD, associate professor of marketing, Boryana V. Dimitrova, PhD, clinical professor of marketing and Yoto V. Yotov, PhD, associate professor of economics, authored an opinion piece for the Conversation that talked about their recent research that found each drop on a scale of a country’s reputation is associated with a decrease in export volume of 2 percent. The methodology for the research, funded in part by the University of Oxford’s Centre for Corporate Reputation, is also explained in the Conversation piece available at this link.

The authors provided an illustrative example of how exports would be affected if the U.S were to drop one reputational rung among Canadians. With all other factors remaining equal, they would expect a corresponding 2 percent decrease in exports to Canada. If that were to be applied to the 2016 exports, that would mean a potential loss of more than $5 billion for one country alone.

The effect, the authors claim, is roughly equivalent to an importing country raising tariffs by 3 percent. For a large exporter like the United States — with an estimated $1.5 trillion in exported goods per year — a uniform drop in reputation could put tens of billions in manufacturing exports in jeopardy.

Pew has produced its survey annually since 2002, starting with the first term of George W. Bush’s presidency. The edition released late June was the first to be conducted since Trump took office in January.

According to the survey, a median of 22 percent across all the countries surveyed expressed confidence that Trump will do the right thing when it comes to international affairs. That’s 44 percentage points behind the results of the previous survey.

While the Trump administration has made stimulating exports a priority, the Drexel researchers say a meaningful ingredient—the impact of a country’s reputation— is being overlooked.

“Our research makes one thing clear,” the authors wrote. “Countries ignore their international reputations at their peril. If Trump is serious about increasing exports, a good place to start would be improving America’s – and his – standing in the world.”

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