One of U.S. President-elect Donald Trump’s main pledges on the campaign trail was to bring jobs back to the U.S. In a video-taped speech last week, Trump vowed on day one of his presidency to issue a notification of intent to withdraw from the 12-nation Trans-Pacific Partnership, which he calls “a potential disaster for our country.”
If Trump delivers on those campaign promises to get tough with China on trade, he most likely will find another opponent: U.S.-based multinational corporations. These companies have more than $228 billion in China investments at stake in the event of a trade conflict between the world’s two biggest economies. Their track record of pushing back against Washington on trade indicates they’ll back their own interests—and China’s—if enmity erupts, explains a recent Bloomberg article.
The U.S. Chamber of Commerce and other pro-trade groups have influential allies among Republicans who lead both chambers of Congress. While many say they are willing to consider Trump’s proposals, including to recraft some trade deals, they also say the see benefits to free trade in their home states and to the U.S. economy.
“My state is the No. 1 exporting state in the nation, and not coincidentally our economy tends to be doing better than a lot of the rest of the country,” John Cornyn of Texas, the No. 2 Senate Republican, told reporters this month. Furthermore, Cornyn, who leads the Senate Finance subcommittee on trade, said he views Trump’s campaign promises on trade as the starting point in a debate. “It’s a conversation,” he said. “Nobody gets to set the agenda unilaterally around here because of the separation of powers.”
It isn’t just China that draws Trump’s ire, he often targets Mexico as well. That’s interesting because today Trump and Mike Pence, Indiana’s governor and the vice-president elect, plan to appear at Carrier’s Indianapolis plant to announce they’ve struck a deal with the company to keep a majority of the jobs in the state, according to officials with the transition team.
Carrier, an Indianapolis-based heating, ventilation and air conditioning company owned by United Technologies, made news last spring when it announced that its Indianapolis plant would undergo a three-year relocation to Monterrey, Mexico, starting in 2017. As numerous news outlets reported, the announcement was met with jeering from the plant’s employees, and a video even went viral.
Earlier this week, Carrier’s PR department tweeted that the company had reached a deal with Trump to save nearly 1,000 factory jobs in Indiana from going to Mexico. Carrier’s original announcement was for the loss of 2,000 jobs in the Indianapolis plants, so it remains unclear what will happen to the other jobs. It is also worth pointing out that Vice-president elect Pence remains Indiana’s governor, so he does have a vested interest in the deal.
In exchange for keeping the factory running in Indianapolis, Trump and Pence are expected to reiterate their campaign pledges to be friendlier to business by easing regulations and overhauling the corporate tax code. In addition, Trump is expected to tone down his rhetoric threatening 35 percent tariffs on companies like Carrier that shift production to Mexico.
Nevertheless, it is impossible at this point to know what exactly the terms of the deal are. There is speculation, however, that in addition to Carrier receiving government subsidies, the citizens of Indiana will eventually pay a hefty price.
“It is impossible to assess the merits of the Carrier deal until we know why the company changed its mind—and at what cost to taxpayers?” tweeted New York Times correspondent Binyamin Appelbaum.
“Company says they’ll leave, government comes up with a big bribe to pay them to stay,” tweeted MSNBC host Chris Hayes.
What are your thoughts on Trump possibly following through on pledges to withdraw from the 12-nation Trans-Pacific Partnership? What impact would it have on supply chains?