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Trump Takes Twitter Aim at Companies Looking to Move Jobs Abroad Trump Uses a Strong Arm and Sweet Deals to Negotiate for Jobs
(about 3 hours later)
WASHINGTON — President-elect Donald J. Trump on Sunday renewed his hard line on American companies that plan to shift operations abroad, using a series of early-morning Twitter posts to warn again that “there will be a tax” of 35 percent levied against goods moved “back across the border” for sale. WASHINGTON — Donald Trump isn’t done taunting corporate America.
The Twitter messages came days after Mr. Trump went to Indiana to celebrate a decision by the heating and cooling giant Carrier to keep in that state about half of the 2,000 jobs it had planned to eliminate as it moved production to Mexico. After last week’s Rust Belt victory lap, where he claimed credit for persuading Carrier to keep perhaps 1,000 factory jobs in Indiana, Mr. Trump took to Twitter Sunday morning and warned of retribution for other companies contemplating moving production abroad.
But in the case of Carrier, it was not a large tariff that prompted it to retain the American jobs. It was, in part, $7 million in incentives from the State of Indiana, the sort of corporate giveaway that Mr. Trump railed against during the campaign. But even as Mr. Trump tries to put the bully in bully pulpit, the question of whether his approach is smart economic policy, improvised showmanship or a bit of both is another story.
Moreover, replicating the Carrier success would be difficult on a large scale — an American president has limited tools to counter the global economic forces that prompt companies to shift production to lower-wage countries. And because taxes cannot be directed at specific companies, any tariffs would have to be broad, and therefore broadly painful. Indeed, his tactics have drawn criticism from both the left and the right, with a range of experts saying his approach may be ineffective at best, and crony-capitalist and caudillo-like at worst.
In his Twitter posts, Mr. Trump said: “The U.S. is going to substantially reduce taxes and regulations on businesses, but any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG!” “Blackmail is implicit in this approach, and it’s dangerous,” said Tyler Cowen, a conservative free market-oriented economist who teaches at George Mason University. “It’s a lot of political theater, but that’s not even my biggest criticism. Trump is negotiating with individual businesses outside of the rule of law and bureaucratic procedure.”
A 35 percent tariff, he said, “will make leaving financially difficult, but these companies are able to move between all 50 states, with no tax or tariff being charged.” On Friday, Mr. Trump took aim at Rexnord, another Indianapolis manufacturer that disclosed plans in October to move to Mexico. “No more!,” he tweeted, helping to push Rexnord’s stock down 8 percent for the week.
“Please be forewarned prior to making a very expensive mistake!” he added. “THE UNITED STATES IS OPEN FOR BUSINESS.” According to Mr. Trump, the penalty would be a 35 percent tariff imposed on goods that companies ship back into the United States after they move production abroad. It is doubtful that Mr. Trump would have the legal authority to punish individual companies without congressional action. But he is also promising a broader overhaul of corporate taxes and the elimination of a host of regulations that he sees as stifling American companies, in addition to individual incentive packages like the $7 million one that Carrier received.
Mr. Trump had signaled a day before that he planned to continue to apply pressure to companies considering moves abroad, singling out on Twitter another Indiana company, the bearing manufacturer Rexnord. Mike Konczal, an economist at the left-leaning Roosevelt Institute, said he also thought Mr. Trump’s approach was doomed to failure, especially if he kept his campaign pledge to reduce taxes on corporations and investors.
“Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers,” he wrote. “This is happening all over our country. No more!” “Cutting taxes for shareholders will destroy more factories than whatever he saves by jawboning companies from the bully pulpit,” Mr. Konczal said. And incentives like the ones Carrier received only forestall the inevitable shift by multinational giants to low-cost locales like Mexico and Asia. “They will just go later after pocketing some money,” Mr. Konczal said.
Vice President-elect Mike Pence played down the punitive aspects of Mr. Trump’s proposals in television interviews Sunday morning, dismissing the suggestion that Mr. Trump was picking “winners and losers” or that he had inappropriately intervened in the Carrier case. Making deals with big business may prove much harder than Mr. Trump is willing to acknowledge. After all, he held off on using the stick with Carrier, and handed over $7 million worth of carrots, but the company only gave Mr. Trump half of what he wanted, with 1,000 Indiana jobs still leaving for Mexico.
“No, I don’t think it’s picking winners and losers at all,” Mr. Pence said on ABC’s “This Week.” “What the president-elect did with Carrier was simply reach out one American to another and ask them to reconsider.” Moreover, Mr. Trump is pushing back against tectonic economic forces that show no sign of easing. Besides the continuing loss of factory jobs to automation, Carrier is far from unique in shifting blue-collar jobs to places like Mexico, even as it keeps white-collar functions like sales and research and development in Indiana.
Mr. Pence said that Mr. Trump had used the case to telegraph to companies thinking of moving operations abroad that he would pursue an aggressively pro-business policy agenda, including lowering corporate taxes and easing regulations, as well as renegotiating trade deals to protect American jobs. “There isn’t a silver bullet,” said Steven Rattner, a veteran financier and Democrat who led President Obama’s successful effort to rescue the auto industry in 2009. “And what’s ironic is that there isn’t a single thing in Donald Trump’s campaign platform that would help people hurt by these trends.” Mr. Rattner is also a contributing opinion writer for The New York Times.
“He’s going to put on the table all the tools that are going to take away the advantages of companies that for far too long have been pulling up stakes, leaving American workers behind,” Mr. Pence said. Still, whether it’s a smart strategy or not, it is clear Mr. Trump is planning more Carrier-like standoffs after he moves into the Oval Office on Jan. 20.
Asked if Mr. Trump would intervene directly with other companies planning to move jobs out of the United States, Mr. Pence said decisions would be made “on a day-by-day basis.” “This is no one-off,” he said in an interview with The Times after touring the Carrier factory floor in Indianapolis on Thursday and greeting cheering workers. “That’s one of the reasons I’m here as opposed to doing it from my lobby in Manhattan.”
Rather than tax breaks or tariffs on a case-by-case basis, perhaps the best argument for Mr. Trump’s tactics are that they may prompt a rethinking of corporate responsibility among executives, said Justin Wolfers, an economist and New York Times contributor who teaches at the University of Michigan.
“The question is what’s the game?” Mr. Wolfers said. “If it’s about changing norms, and saying private enrichment at the expense of the broader public good is no longer socially acceptable, that’s important.”