USA out of the TPP: Impact and opportunities for businesses

On 23 January, President Donald Trump signed an executive order to withdraw the United States from the Trans Pacific Partnership. What’s left for those companies interested in doing business in the country? Our local expert explains.

The potential impact on international businesses

The USA has decided not to ratify the TPP, which was originally conceived as a way of promoting economic growth through encouraging trade between Pacific Rim Countries. If the bi-lateral trade agreement had been passed it would have reduced regulatory barriers and cut tariffs between the signatory countries.

The new administration has been clear that their focus is on USA based businesses, producing domestically and creating jobs for American workers. To do so, it is likely that there will be an increase in taxes on imports from countries currently operating a trade surplus versus the USA. Related to which a 20% tax on Mexican imports was touted as a way of financing the construction of a border wall to control immigration.

These policies will increase costs for those trying to sell into the USA and these businesses in turn are likely to pass at least part of these costs onto US consumers in the form of higher prices. One of the impacts of which will be the increased competitiveness of domestic businesses who are able to avoid these increased costs.

Investment opportunities

We wait to see what the fallout will be for the abandonment of the TPP, and what if any alternative economic agreements are put in place across the Pacific region. In the meantime, those looking to gain access to the USA market would be wise to consider the option of establishing a US-based entity from which to do business.

The US represents 25% of all global economic activity and is home to 1 In 4 of the world’s top 500 companies. Many US states and cities offer tax credits and other investment incentives to attract global investments.

All signs point to the US Executive taking a business friendly stance when it comes to lowering Corporate Income Tax and reducing the complexity of doing business. We have even seen USA businesses given incentives to cancel offshoring initiatives and keep operations in America. The net effect is that there are many reasons to consider now a good time to invest in setting up shop in the USA.

Local requirements

While initial entry and registration to the country’s system can be relatively straightforward, staying compliant with local governance requirements can be quite complex:

  • All companies registered with the US Securities and Exchange Commission are required to prepare annual audited financial statements.
  • Every foreign invested company incorporated in the US must apply for a federal identification number.
  • Each one of the 50 states has sovereignty relating to incorporation procedures, taxes and laws, while each city or county may impose further requirements for local taxes and business licenses.
  • Each state in which you register to do business, requires a registered ‘local’ agent for service of process.

Getting expert help

TMF USA specializes in supporting businesses looking to set-up operations, or invest, in the USA.  We have a team of experienced professionals who are practiced at supporting international businesses, applying local knowledge alongside the considerations of foreign based clients.

Our New York and Miami based offices provide a range of services including:

  • Payroll, Benefits Administration and HR Support
  • Bookkeeping, Reporting and Tax Compliance
  • Corporate Secretarial and Directorship Services
  • Structured Finance and SPV Administration
  • Real Estate and Private Equity Investment Services

If you are looking for further information on our services, or would like to take advantage of a free consultation regarding your investment options, please do not hesitate to reach out by email or phone

Jason Gerlis
Jason  Gerlis
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