Trump's trade war bruises Brand USA
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Brand USA is losing its luster: There's less appetite around the world to buy American as the United States' reputation plunges in the wake of President Trump's trade war.
Why it matters: Companies accustomed to a boost just because they come from the U.S. are struggling to adapt.
State of play: "The aura around America has dimmed a bit," McDonald's CEO Chris Kempczinski told CNBC this week. Even so, sales for the fast-food giant are holding up so far, he said.
- Other well-known American brands are feeling the pressure, too.
- Brown-Forman, the company that makes U.S. booze brands Jack Daniel's and Woodford Reserve, saw sales drop after American alcohol was taken off the shelves in some Canadian provinces in protest of tariffs, CEO Lawson Whiting said in an August investor call.
- Tesla has also taken a big hit to its brand this year in Europe, a result of CEO Elon Musk's entanglements with the White House.
The big picture: Companies' reputations have long been tied to their country of origin's global standing — particularly fast-food and beverage businesses.
- Brands like Coca-Cola and General Motors, or even Facebook, are inextricably tangled up with their American identities.
Zoom out: Globally, America's favorability rating started declining in earnest in January when Trump was elected.
- It plummeted after his Liberation Day tariff announcement in April, according to data tracked by business intelligence firm Morning Consult.
By the numbers: The firm surveys adults across approximately 42 markets in Europe, the Americas, Asia and the Middle East, to assess whether they have a positive or negative view of the U.S.
- Globally, the average U.S. favorability rating is at -3.24. (That is, more folks have a negative view than a positive one.) It's been in negative territory since April — though it's bounced back slightly from its April bottom.
- In January, America had a positive favorability rating of 15.34.
Zoom in: Though there have been ups and downs in America's global standing, it's "typically been a benefit," says Sonnet Frisbie, deputy head of political intelligence at Morning Consult.
- Companies didn't have to consider America's rep much before, but now they're worried, says Frisbie, and looking for ways to adjust strategically.
Between the lines: Firms might be more keen to emphasize their ties and commitments to other countries, as Kraft Heinz did back in January — as the trade war heated up — when it put out a statement, emphasizing that it produces ketchup in Canada.
The other side: This isn't all about President Trump's policies.
- In the Middle East, support for Brand USA took a hit during the Biden administration in 2023 at the start of the conflict in Gaza. with folks in the region boycotting fast food chains like KFC and Starbucks.
- Americana, a company that operates U.S. franchises in the region, saw profits fall nearly 40% last year, per the FT.
The bottom line: Even inside the U.S., the American brand is dimming. In a survey commissioned by the Wall Street Journal, nearly 40% of Americans said other nations have better economies than the U.S. — up 15 points from 2021.
- "America in some ways has lost its sense of exceptionalism," the WSJ reports.
