THE ECONOMIST: MAGA moves spark a new image problem for American brands

For decades America’s soft power put the wind in the sails of its companies as they ventured abroad. When the Berlin Wall fell, Coca-Cola sent lorries emblazoned with its logo into East Berlin, handing out free drinks to the amassing crowds. Sales soon soared, as consumers in the former communist state chugged enthusiastically on the sugary icon of American capitalism.

Peddling Americana abroad, however, is getting trickier. Last month Carlsberg, a Danish brewer that bottles Coca-Cola in its home country, noted that consumers there were boycotting the fizzy drink, opting for local alternatives such as Jolly Cola instead.

For this Coca-Cola can thank Donald Trump, who has exasperated Danes—and many other consumers around the world—with his talk of territorial expansion and his chaotic trade war. How worried should America Inc’s bosses be about their new image problem?

That Mr Trump has damaged America’s reputation abroad is clear to see. In a survey of more than 100,000 people across 100 countries carried out last month by Nira Data, a research firm, for the Alliance of Democracies, a Danish non-profit, the share of respondents with an unfavourable view of America exceeded those with a favourable opinion by five percentage points, a sharp deterioration from previous years, and enough to place America behind China in global esteem.

The president’s actions are already weighing on American companies’ sales abroad. The backlash has been strongest in Canada, whose citizens have railed against the suggestion that their country become America’s 51st state, and Denmark, thanks to Mr Trump’s threats to pinch Greenland.

Last month 61 per cent of Canadians told YouGov, a pollster, that they were boycotting American products. Earlier this year Ontario and Quebec, Canada’s two largest provinces, pulled American-made alcohol from the shelves of government-run liquor stores, hurting sales of products such as Jack Daniel’s.

Kraft Heinz, an American food giant, has been reminding Canadians that much of what it sells in the country is made there from local ingredients. In Denmark, the country’s largest retailer, Sailing Group, has been labelling European-owned brands in its shops to make it easier for customers to avoid American products.

The souring of consumers towards American brands has been on display elsewhere in Europe, too. Tesla, Elon Musk’s carmaker, is perhaps the most prominent example: new registrations of its vehicles in Europe fell by more than 40 per cent year on year in the first quarter.

But it is not the only American company at risk. In a survey conducted in March, the European Central Bank asked respondents how likely they would be on a 100-point scale to substitute away from American goods in a hypothetical scenario in which America imposed a blanket tariff that the EU then matched, where 100 indicated a strong willingness to switch. The median score given by Europeans was 80. Tellingly, respondents were more likely to cite preference, rather than price, as their main reason for switching.

All this will worry American firms, which make more than $US8 trillion ($12.4trn) in foreign sales each year. Not all will be equally harmed by their country’s deteriorating global image. Morning Consult, a pollster, has examined the correlation between consumers’ views of America and their opinion of the country’s brands across industries. The relationship is strongest for technology companies, carmakers and food-and-beverage firms, and weakest for hospitality companies, logistics providers and health-care firms.

Foreign consumers are more likely to forgo a bag of Cheetos in protest than they are a cancer treatment from Pfizer. A lack of alternatives may also make it harder for them to abandon services such as Google or Instagram.

Even so, many American firms will have to grapple with the fact that their nationality may no longer be an asset — but a liability.