The Impact of the US Entry Ban on Business

The inauguration of US President Trump on January 20, 2017 ushered in a phase of uncertainty in transatlantic relations. It is already clear that the USA will not be the reliable partner for the near future who has guaranteed the stability of the international economic order in the past decades. Alliances in military, political and economic areas that were believed to be secure are seemingly carelessly questioned by Trump. The entry ban for citizens of seven Muslim-majority countries, which was passed on January 27, also posed major problems for many US partners. Shortly after it came into force, the controversial decision was declared unconstitutional. The US government has since announced that it will issue a new version of the decree.

It is currently not possible to estimate the economic damage that German companies have suffered as a result of the entry ban1. Many companies that employ employees with dual citizenship are unsettled by the confusing situation. The content of the recast, like the policy of the President as a whole, is difficult to predict. Nevertheless, constitutional principles and domestic political dynamics in the USA give rise to some approaches that companies can take into account in their strategic planning.

Background of the entry stop

Mit dem Dekret zum „Schutz der Nation vor der Einreise ausländischer Terroristen in die Vereinigten Staaten" löste Trump ein Wahlversprechen ein. Während des Wahlkampfes im vergangenen Jahr lenkte Trump die öffentliche Debatte wiederholt auf die Bedrohung durch den internationalen islamistischen Terrorismus. Er nutzte Ressentiments gegenüber der muslimischen Minderheit um einen desaströsen Zustand der inneren Sicherheit in den USA zu skizzieren. Gleichzeitig präsentierte er sich als kompromisslosen Verfechter einer „Law and Order“-Politik und konnte dadurch bei weiten Teilen der amerikanischen Bevölkerung punkten. Mit dem Einreisestopp wollte Trump bereits kurz nach der Amtseinführung Entschlossenheit demonstrieren. Personen aus Syrien, Irak, Libyen, Somalia, Jemen, Sudan und Iran sollte durch das Dekret für 90 Tage die Einreise in die USA verboten werden. In dem Erlass wurden keine Angaben zu Sonderregelungen gemacht, wodurch auch Personen mit gültigen Aufenthaltspapieren und festem Arbeitsplatz in den USA an der Wiedereinreise gehindertwerden konnten. Das Dekret stieß unmittelbar nach Inkrafttreten auf heftigen Widerstand der amerikanischen Öffentlichkeit und wurde als unamerikanisch, unmenschlich und kontraproduktiv bezeichnet. Auch eine große Anzahl von US-Unternehmen, die durch die unzureichende Spezifizierung des betroffen Personenkreises negative wirtschaftliche Konsequenzen fürchteten, drückte ihre Ablehnung in öffentlichen Stellungnahmen aus. Von dem Erlass waren auch Deutsche betroffen. Dasprominenteste Beispiel war der deutsch-iranische Bundestagsabgeordnete Omid Nouripour, der als außenpolitischer Sprecher der Grünen, Vizechef der deutsch-amerikanischen Parlamentariergruppe und Vorstandsmitglied der deutsch-atlantischen Gesellschaft regelmäßig in die USA reist.

With the Decree "Protecting the Nation from Foreign Terrorists Entering the United States" Trump kept an election promise. During last year's election campaign, Trump repeatedly directed public debate to the threat posed by international Islamist terrorism. He used resentment towards the Muslim minority to outline a disastrous state of internal security in the USA. At the same time, he presented himself as an uncompromising advocate of a “law and order” policy and was thus able to score points with large parts of the American population. With the entry ban, Trump wanted to demonstrate determination shortly after his inauguration. People from Syria, Iraq, Libya, Somalia, Yemen, Sudan and Iran should be banned from entering the USA for 90 days by the decree. The decree did not provide any information on special regulations, which could prevent people with valid residence papers and permanent jobs in the USA from re-entering the country. The decree met with fierce opposition from the American public immediately after it came into effect and was labeled as un-American, inhuman and counterproductive. A large number of US companies that feared negative economic consequences due to the inadequate specification of the group of people affected, expressed their rejection in public statements. Germans were also affected by the decree. The most prominent example was the German-Iranian member of the Bundestag Omid Nouripour, who regularly travels to the USA as foreign policy spokesman for the Greens, deputy head of the German-American parliamentary group and board member of the German-Atlantic Society.


It remains unclear whether President Trump and his team of advisors intentionally provoked the legal tug-of-war or misjudged the legal situation. It is quite conceivable that a public confrontation with the jurisprudence was part of the White House's political calculation. So it would be possible that Trump's image as an opponent of a despicable system should be strengthened and the limits of the presidential decision-making power should be explored. On the other hand, it is conceivable that the chaotic handover, a lack of coordination between administration and cabinet as well as gaps in knowledge or indifference in the president's advisory staff led to the decree. As things stand today, it is unlikely that the announced new version will be worded in a similarly drastic manner. A renewed failure in the American courts would be difficult to sell as a political injustice and would seriously damage the reputation of the president and the confidence in the ability of the government to act. It is more likely that exception regulations will be made in the revised version, for example to allow employees of US companies and persons with a valid work permit to enter the country. This would serve Trump's corporate interests and at the same time present his electorate with a victory.

Overall, the future of the US under President Trump remains uncertain. The only constant in the president's month-long tenure is his unpredictability. This confusing situation can cause problems for foreign companies in the USA. Immediately after the US election, many German executives were still optimistic. In a survey by the Association of German-American Chambers of Commerce, 98 percent of the companies stated that they expected positive economic developments in 2017. Keep planning 85 Percent to create new jobs. More than 670,000 people are already working in the USA, e.g. for German subsidiaries. It cannot be in the US President's interest to endanger this development. Nonetheless, Donald Trump's “America First” policy, under which, for example, punitive tariffs were demanded for German companies, could reduce the trade relationship between Germany and change America forever. He has already criticized what he saw as unfair German trade policy on several occasions and threatened severe consequences. It remains to be seen to what extent such measures will be implemented in practice. At the moment, it must be assumed that the conditions for German companies in the USA are becoming more difficult. However, the current status of the entry stop planned by Trump does not have far-reaching consequences for German business travelers.

Copyright - Litehouse Consulting

#OliverHirt #LitehouseConsulting #Trump #travelban