Aftera presidential election that results in a change in partyleadership, it is often difficult to distinguish betweenunrealistic campaign promises and those policies that are actuallyachievable within the Beltway. With the recent election of DonaldTrump, clarity is more elusive than usual because many of thecampaign's promises weren't specific policies, but rather broadstatements regarding renegotiating trade pacts, reducing taxes,increasing infrastructure spending, and eliminating the offshoringof production of goods sold in the United States. Many of thesestatements of policy intent left the related policy details to beworked out later.

Time can be a great clarifier of the areas in which what waspromised overlaps with what is possible. Therefore, leaders inbusiness sectors throughout the United States—as well as executivesaround the world who hope to sustain ties with the U.S. economy—arelooking forward to transparency on the new government's direction.They're hoping to understand that direction as soon as the first100 days of President-Elect Trump's term.

It's worth noting that although Washington will have anall-Republican government, the dynamics between the president-elect and CongressionalRepublicans may make implementation of a common policy agendachallenging. The Washington establishment is very likely to presentstiff headwinds on certain issues. There is pent-up demand formajor legislative action on a range of issues, but thepresident-elect will have to effectively harness the power of theOval Office in order to deliver on his campaign promises.

Policy Priorities of Trump's First 100Days

That said, the following issues will likely be priorities of thenew administration within its first 100 days:

1. Dealing with the Affordable Care Act (i.e., “Obamacare”), whichwas a linchpin of the campaign: Should it be fixed, or dismantledand replaced?
2. Reversing executive orders, particularly those related toimmigration.
3. Clarifying immigration policy, with an early emphasis onsecuring the border.
4. Establishing a tax-reform strategy to simplify the tax code andreduce taxes.
5. Filling the current U.S. Supreme Court vacancy.
6. Clarifying trade policy.
7. Repealing or rolling back the Iran nuclear deal.
8. Cracking down on corporate offshoring.
9. Launching infrastructure investment programs, including thewall on the border with Mexico.
10. Abandoning the Paris climate accord.

The new administration's focus on rebuilding infrastructure andrenegotiating trade agreements, tax reform, fiscal policy, and immigration rules may directlyor indirectly affect the overall health of the U.S. and globaleconomy. Notwithstanding the new administration's goal of boostingeconomic growth, the president-elect's proposed fiscal expansioncould increase both deficits and inflation.

TheTrump presidency might also impact the Federal Reserve. During his campaign, the president-electexpressed criticism of the monetary-policy choices of Fed ChairJanet Yellen. Trump's appointments to the Fed over the near termbear watching. On the one hand, hawks eager to raise rates rapidlycould push the U.S. economy into recession. On the other hand, doveappointments would support faster growth in output and risinginflation.

Tax reform is expected to be a top priority over the next twoyears for both the administration and Congress. Trump has proposedreducing the corporate tax rate to 15 percent to encourage morestartups, expand existing companies, fund improvements in corporateinfrastructure, and make the country a much more competitive taxenvironment for multinationals. In addition, the president-electmay offer a one-time tax rate of 10 percent for global companiesrepatriating profits from abroad. U.S.-based multinationals arecurrently estimated to have un-repatriated earnings totaling $2.1trillion. Bringing these profits back to the U.S. could help fund awave of economic expansion in the United States if the appropriatestrings are attached.

At the same time, any effort to transition away fromglobalization might lead to lower returns on capital, lower realinterest rates, and a weaker dollar. Trade will likely be acontentious issue during the Trump presidency. Sweeping changes intrade policy will likely be complicated by divisions within theRepublican establishment in Congress.

However, during the campaign, the president-elect criticized theNorth American Free Trade Agreement (NAFTA); the Trans-PacificPartnership (TPP), an agreement between the United States and 11other countries, including Japan and Vietnam, designed to lower oreliminate tariffs; and U.S. trade with China. One of his primaryconcerns is with U.S. companies offshoring operations and thenselling products back to the U.S. markets, resulting in theelimination of U.S. jobs.

Ifthe United States were to impose tariffs, offshored operationsmight begin to serve other global markets. This would likely causeshortages in raw materials in the U.S., which might reduce theavailability of consumer products and/or increase prices—possiblyoffsetting any increases in disposable income achieved through taxreform. In addition, of course, if the United States were tounilaterally impose trade restrictions, other countries mightrespond in kind with punitive restrictions of their own, whichwould put a damper on global trade and could usher in an era ofdangerous protectionism.

Immigration was another contentious campaign issue. According toone estimate, immediately and fully enforcing current immigration law—asTrump has suggested—would cost between $400 billion and $600billion, and would require many years. Doing so would also shrinkthe labor force by 11.2 million workers, an impact that would befelt most in the agriculture, construction, retail, and food andbeverage services sectors.

Security is also expected to be a priority during the Trumppresidency. The administration will likely focus on protecting U.S.borders and expanding the armed forces. Anti-Money Launderingregulation and cyber regulation will remain priorities, given theirlinkage to national security and fighting terrorism. Theadministration may also reverse course with countries such as Iranand Cuba, reinstituting some of the curbs that the Obamaadministration has lifted.

Industries That Will Win Under Trump

Needless to say, many questions remain to be answered as the newadministration gets under way. Whatever the answers to thesequestions, there will be winners and losers in theTrump sweepstakes¹. Likely winners includecompanies in these sectors:

Airlines. As president, Trump isexpected to be more sympathetic to U.S. airlines' claims of unfaircompetition from state-controlled carriers.

Construction. If Trump followsthrough on his promise to fix the nation's inner cities and rebuildhighways, bridges, tunnels, and other infrastructure, then theconstruction industry should benefit significantly.

Defense. Increasing defensefunding and securing the U.S. borders will probably be toppriorities for the administration, which will benefit the defenseindustry and its suppliers. Increasing the size of the Army,expanding the Navy fleet, adding more combat jets, and preparingfor cyber warfare are likely to be on the list of priorities.

1. Some of the information in this section was obtained fromthe article “Trump Victory: Corporate Winners and Losers,”Richard Milne, Financial Times, November 9, 2016.

Oil and gas. Fossil-fuelcompanies in the United States clearly have a brighter future withthe president-elect than they've had under the Obamaadministration. Candidate Trump pledged to make the United States“energy independent,” both by opening new areas of thecountry—including federal land—to oil and gas development, and bychanging environmental policies and greenhouse gas standards thathave driven closures of U.S. coal-power plants, stymied demand forcoal, restricted fracking, blocked the Keystone pipeline, andhamstrung refineries. Nevertheless, reversing the decline of coalwill be a formidable challenge, as the industry's demise is largelya result of the abundance of natural gas since the development offracking.

Onthe international front, the Trump presidency can be expected toincrease geopolitical tensions, given Trump's position regardingthe Iranian nuclear deal. A major oil producer, Iran has justreturned to global crude markets. New sanctions could curbinvestment in Iran's energy sector, impacting global supply.However, actions by other members of the Organization of thePetroleum Exporting Countries (OPEC) will have more influence onmarket supply and prices.

Pharmaceuticals. The newadministration is expected to take a more lenient approach to drugpricing than a Democratic administration would. Trump has said thatsoaring drug prices need to be addressed, and has proposed removingbarriers to entry for drug providers, as well as giving Medicarepower to negotiate drug prices. However, his proposals were lessspecific than Hillary Clinton's, and the Trump administration isexpected to focus more attention on other priorities.

Likely Losers Under the TrumpAdministration

Automotive. The auto industrywill likely be impacted by the new administration in two ways.First, carmakers that import parts from Mexico, or have factoriesthere, would face serious ramifications from withdrawal from NAFTAor from the proposed border wall. And second, Japanese carmakerswill be hard hit if the yen strengthens relative to the U.S.dollar.

Consumer products. The Trumpadministration's approach to reforming cross-border trade, taxpolicy, and labor laws will be under close scrutiny by retailersand consumer advocates. Retail supply chains have become largelyglobal. Repeal of trade agreements would likely cause shortages inraw materials and/or components for U.S.-based consumer-productsmanufacturers, with ripple effects throughout the economy.

In addition, many U.S. retailers and manufacturers have workedfor decades to tap into foreign consumer markets. Suppose that theU.S. were to bring trade cases against China for allegedly usingunfair subsidies to benefit Chinese businesses. This action couldnegatively impact U.S. companies that rely on Chinese suppliers tomake their products, as well as U.S. companies that sell productsto Chinese consumers.

Shipping. The shipping industrythrives on global supply chains and low trade barriers. Shippingcould be adversely affected by trade policies that spawned a waveof protectionism and unwound the decades-long trend towardglobalization.

Technology. Some tech companieswould likely benefit from the president-elect's proposedinfrastructure investments. However, Silicon Valley has concernsabout several of Trump's proposals, including:

• The possibility that tech-friendly trade agreements might getdisrupted and tariffs might be imposed on companies moving jobs tolow-cost offshore destinations.
• The possibility that a Trump administration might stifle innovation by opposing the H-1Bvisas that bring many highly skilled workers to the UnitedStates. A reduction in the H-1B program could dampen startups andaffect projects in both the private sector and the federalgovernment.
• Questions about the balance between security and privacy. As acandidate, Trump criticized Apple's unwillingness to break theencryption on the San Bernardino terrorists' iPhone. These commentshave bred uncertainty in the area of security vs. privacy.
• The likelihood that the U.S. will enact more cyber legislation,as well as initiatives to enforce stronger protections from, andretaliation against, cyber attacks.

Telecommunications. Thepresident-elect has said he would block the proposed AT&T/TimeWarner merger. He has also been critical of Federal CommunicationsCommission (FCC) regulations, and the new administration may enactchanges in that agency. For example, Trump's appointment to headthe FCC might change federal policy around Net neutrality.Republicans previously pushed legislation that would curtail theFCC's ability to enforce Net neutrality, but the effort failedunder threat of a veto by President Obama. That obstacle will likely no longer exist under PresidentTrump.

Industries with Mixed Results Under Trump

Banking. We expect to seelighter-touch regulation on the banking sector, effected throughPresident-elect Trump's picks to head the various agencies and hislikely implementation of a moratorium on new regulations. Smallercommunity and regional banks are most likely to get regulatoryrelief.

Duringthe campaign, Trump said he would repeal the Dodd-Frank Act andreinstitute Glass-Steagall, so it is not clear what his realposition on banking regulations is. In reality, it's more likelythat the new administration will tweak or roll back parts ofDodd-Frank, but not repeal the law.

In the end, the financial services industry needs a strongeconomy, so the banking sector needs to monitor the expected impactof Trump policies on the economy overall.

Healthcare. During the campaign,much was said about repealing the Affordable Care Act. If it wererepealed without being replaced, the pool of insureds would bereduced. However, since 20 million people have health coveragebecause of the law, repeal without replacement is unlikely. Sincethe election, discussion has turned to alternative approaches.Options include:

• Modifying the Affordable Care Act (ACA) through rule-making andsmaller legislative changes.
• Undermining the ACA by dropping the present administration'sappeal of a court ruling against an executive order that allows forfederal “cost-sharing” payments to insurers, which results in deepdiscounts for many health-insurance customers.
• Suspending and altering ACA regulations—for example, to allowfor benefit plans that don't meet ACA minimum requirements.
• Altering the dynamics of how the ACA exchanges work.
• Neglecting the ACA by failing to fund it in the budgetprocess.

One possible alternative to the ACA is tax-free health savingsaccounts, which Trump proposed during the campaign to enableindividuals to save money to pay for healthcare costs whilededucting the cost of their premiums for tax purposes. He alsoadvocated requiring price transparency from all providers (e.g.,doctors, clinics, hospitals, and other healthcare organizations)and increasing competition among insurers by allowing them tomarket and sell policies across state boundaries (i.e., they wouldbe allowed to offer insurance in any state so long as their planscomply with state requirements).

The president-elect is also committed to reforming the veteranshealthcare delivery system. How that initiative would impact thebroader healthcare industry bears close scrutiny.

On the plus side, the Trump administration may view industrymergers more kindly than his predecessors.

Manufacturing. As withconstruction contractors, materials and heavy equipmentmanufacturers will benefit from renovation of the nation's innercities and the rebuilding of highways, bridges, tunnels, and otherinfrastructure. However, fair trade is expected to be a priorityfor the Trump administration. Industrials offshoring theiroperations to other countries and selling products back to U.S.markets are likely to be targeted. Global supply chains of U.S.manufacturers may also be affected.

Insurance. The story here issimilar to that of the banking industry: Optimism that there willbe a lighter regulatory hand (e.g., rollback or at least delay ofthe fiduciary standard, less concern about non-bank SIFIs) must beweighed against possible changes in the state of the economyoverall. A retreat from globalization would certainly not help thisindustry.

Utilities. Large investments inplants, pipelines, and other infrastructure have the power to shapepower generation in the United States for many years to come. Underthe Clean Power Plan (CPP)—a policy aimed at combating globalwarming in accordance with standards set by the Paris climateaccord—and with the current incentives to invest in renewables,U.S. utilities are retiring coal plants and replacing them withwind and solar facilities. If President Trump strikes down the CPP,that would impact those strategic decisions. While Trump has alsostated that he favors nuclear energy, many in the nuclear industrysupport the CPP because it reduces the use of coal.

How much effect the Trump administration will have on utilitiesoverall is unclear, but it will certainly alter competition amongthe various power-generation methods: coal, natural gas, nuclear,wind, and solar.

How Should Companies Be Preparing for PresidentTrump?

Now that the uncertainty around who will occupy the White Houseand control Congress is cleared up, companies need to address therisks associated with changing political realities. Following aresix suggestions companies should consider undertaking now:

Closely watch developments ontrade. The new administration appears to becommitted to a reset of NAFTA and the TPP. President Trump willlikely also focus on addressing trade issues with China—e.g.,currency manipulation, exclusion of U.S. products from governmentpurchases, subsidies to Chinese companies. How these policyinitiatives play out might significantly affect companies'operations in, or exports to, these foreign markets, as well ascompanies that use suppliers based in these markets.

Re-evaluate the assumptions underlying yourcorporate strategy. Every organization'sstrategy is built on both implicit and explicit assumptions aboutthe future. As most observers handicapped the election's odds infavor of a Clinton presidency, many companies probably factoredthat assumption into their strategic thinking. Now that theelection is history, it makes sense to reassess the company'sunderlying strategic assumptions in light of the incoming Trumpadministration and Republican Congress. If it's possible that oneor more assumptions might be rendered invalid, senior managementshould assess the ramifications for corporate strategy and theorganization's business model. Scenario analysis may be useful.

Consider the implications of plausible scenariosgermane to your sector, and begin preparing for thepossible. Define appropriate scenarios, takinginto account your expectations about how the incomingadministration's various trade, regulatory, tax reform,immigration, and other policy plans will impact the company'smarkets, channels, customers, employees, supply chains, and coststructure. Use these scenarios to understand the potential impacton the business and to formulate strategic alternatives that enablethe company to capitalize on market opportunities and addressemerging risks. Update the analysis as more members of thepresident's team are identified and policies are clarified throughinauguration and the first 100 days.

Prepare for more discretionary spendingcapacity. The new administration is expected totry to reduce corporate tax rates to as low as 15 percent, make iteasier for U.S. firms to repatriate profits earned abroad,eliminate the corporate alternative minimum tax, and providespecial tax deductions for firms engaged in manufacturing in theUnited States. What would happen to your company's cash flow ifthese proposals came to fruition? How would the company deploy theadditional cash flow and/or repatriated funds; would it undertakenew investments, pursue merger and acquisition (M&A) targets,pull deferred projects off the back burner, enhance compensationstructures to retain talented employees, expand facilities, upgradesystems, and/or increase dividend rates?

Update M&A plans. Thecombination of a more favorable tax environment, access to foreignearnings, and deregulation would likely encourage more M&Atransactions. Companies should take these changing dynamics underconsideration in assessing their M&A appetite in view of theiroverall corporate strategy and the economic climate.

Diversify if your company's revenue mix is dependenton government funding. Defense contractors cancapitalize on defense spending, and materials companies, heavyequipment manufacturers, and construction contractors may benefitfrom increased infrastructure spending. However, other companieswith a high dependency on government contracts and funding, or withclose ties to federal agencies that may be placed under tightbudgetary constraints, should evaluate opportunities to deploytheir core competencies in markets outside of the public sector.The new administration's priorities will likely strain budgets thatin the past called for subsidies, discretionary spending, andmyriad projects. The president-elect campaigned on eliminatingwaste as a way of reducing deficits, and that means reining inspending. It is not unreasonable to surmise that the newadministration and the Republican Congress will at least restraingrowth in budgets for areas that are not deemed a priority.

As business leaders seek to better understand thepresident-elect and what he might do once he is in office, theywill want to know how the Trump administration will respond whenpolicy positions are opposed, market responses are negative, andunintended consequences are better understood. Will proposals beall-or-nothing, or will the administration compromise on somethingin the middle?

Trump's desire to increase economic growth is unmistakable. Butwill the new administration be flexible in its positions, willingto rethink priorities and reach out for compromise to get somethingaccomplished?

In these exciting times, only time will tell. Nevertheless, evenin this fluid environment, it is not too early to start consideringalternatives to current strategies. Then, as the newadministration's priorities and policy direction become clearerover time, companies can firm up their responses to expectedchanges in their operating environment. Keeping in mind these sixpoints will help companies in every sector confidently face achallenging future.

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Jim DeLoach is a managing director atProtiviti. He has over 35 years of experience and is a member ofProtiviti's Solutions Leadership Team. With a focus on helpingorganizations respond to government mandates, shareholder demands,and a changing business environment in a cost-effective andsustainable manner, DeLoach assists companies in integrating riskand risk management with strategy setting and performancemanagement. He has been named to the NACD Directorship 100 listfrom 2012 to 2016.

Carol Beaumier is an executive vicepresident, strategic planning, with Protiviti and a member of thefirm's executive management team. She has more than 30 years ofexperience in consulting and as a former regulator with the U.S.Office of the Comptroller of the Currency. Beaumier is a frequentauthor and speaker on a wide range of financial industry risk andregulatory issues.