Trumpnomics: US Companies Make Less Money, People Get More Jobs?Posted: January 11, 2017
Reuters describes in its report today US business’ worry about Trump’s policy of bringing jobs back from abroad that may give rise to a trade war that hurt US business’ interests abroad, especially in China.
It gives its report on the worry the sensational title of “U.S. companies have new business risk – being labeled ‘anti-American’ by Trump”.
The report begins with the description: “Some U.S. companies are reviewing potential mergers while others are rethinking job cuts or looking at their manufacturing operations in China for fear of being cast as ‘anti-American’ by President-elect Donald Trump, according to Wall Street bankers, company executives and crisis management consultants.”
It seems to me Trump will hurt US rich people’s interests to benefit poor unemployed people. Something similar to what communists in China did before the reform and opening up but failed. Depriving rich people of their wealth only lead to common poverty.
However, I believe US people choose Trump due to his wisdom instead of his stupidity. Trump must certainly be aware that America needs wealth to prosper. The US will certainly be benefited by the lot of money its firms make abroad. The problems is only Trump has to force them to bring home the wealth they have made instead of allowing them to keep their wealth away from the US with some tricks to evade tax, etc.
Comment by Chan Kai Yee on Reuters’ report, full text of which is reblogged below:
U.S. companies have new business risk – being labeled ‘anti-American’ by Trump
By Lauren Hirsch and Mike Stone | NEW YORK/WASHINGTON Tue Jan 10, 2017 | 3:10pm EST
Some U.S. companies are reviewing potential mergers while others are rethinking job cuts or looking at their manufacturing operations in China for fear of being cast as “anti-American” by President-elect Donald Trump, according to Wall Street bankers, company executives and crisis management consultants.
Having seen some of America’s largest companies, including General Motors Co (GM.N), Lockheed Martin Corp (LMT.N) and United Technologies Corp (UTX.N), bluntly and publicly rebuked by Trump on Twitter, many others are worried they may be his next target – especially if they have significant overseas manufacturing, have had U.S. job cuts or price increases for consumers.
“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!” Trump, who assumes office on Jan. 20, tweeted in December.
Trump campaigned on an “America First” anti-globalization platform that promised the return of thousands of U.S. manufacturing jobs to economically depressed areas.
That nationalist rhetoric and Trump’s willingness to use his Twitter account as a cudgel has so rattled some companies that they are putting on hold mergers and acquisitions that may involve significant job cuts or moving production or tax domicile abroad, out of fear that such deals could be seen as “unpatriotic”, several top Wall Street bankers said.
Bermuda-based White Mountains Insurance Group Ltd (WTM.N) had been in talks to sell itself in a transaction that would have been structured as an inversion – where a U.S.-based buyer would move its tax domicile overseas.
However, the deal fell apart after the November election partly because potential buyers worried that leaving the U.S. tax home would be seen as “anti-American,” three people with knowledge of the matter said. Potential buyers also found the target less attractive because of the likelihood of lower U.S. corporate taxes under the Trump administration, the people said.
Representatives of the $3.8 billion company declined to comment.
At least two other insurance deals have also fallen apart since the election for similar reasons, said the people, who declined to elaborate and asked not to be named because the matter is not public.
Trump’s aggressive anti-China rhetoric has also given some companies pause.
James Park, chief executive of wearable fitness device maker Fitbit Inc FIT.O, said he expects all companies that have significant manufacturing operations in China, including his own firm, to prepare contingency plans.
Trump has threatened to hit China and Mexico with high tariffs and named vocal China critic Peter Navarro to lead a new White House office overseeing U.S. trade policy.
“Whether it’s taking higher costs into account or operationally preparing for moving manufacturing (out of China), companies are thinking about what to do,” Park said in an interview.
WATCHING TRUMP’S TWEETS
Companies are also beefing up their Twitter monitoring for any Trump tweets that could affect them and engaging public relations firms for advice on potential lines of attack and how to respond if they were to come, several U.S. chief executives as well as half a dozen corporate advisers told Reuters.
“Back in December the board was already asking questions: ‘What’s the plan in terms of what happens if he comes after us, are we ready? The board is asking us if we have a PR firm at the ready, if we have a person monitoring his Twitter,” said a top executive at a large U.S. defense contractor.
“Our plan is to not get into a fight, and concede immediately. The reality is that we’re trying to stay below the radar,” the executive said, asking not to be named because of the sensitivity of the issue.
Since his election in November, Trump has ramped up criticism of companies from Ford Motor Co (F.N), Toyota Motor Corp (7203.T) and GM, to United Tech and Rexnord Corp (RXN.N) over manufacturing in Mexico for U.S. consumers or moving U.S. jobs abroad.
Trump also slammed Lockheed Martin and Boeing Co (BA.N) for what he called “out of control” costs on their weapons programs.
Both Lockheed and Boeing have said they will work to drive down costs of the programs, while Ford scrapped plans to build a $1.6 billion plant in Mexico, and United Tech’s Carrier unit is keeping half of the 2,100 U.S. jobs it was to shift to Mexico.
Government relations and public relations advisers say they have received a number of calls from companies wanting help in assessing if they have any red flags that could draw Trump’s ire.
Advisers say these potentially include outsourcing of manufacturing, consumer price increases and lower tax rates than peer companies.
“We have literally had about a dozen clients ask us how they should be thinking about this in the last few weeks,” said George Sard, chairman and CEO of strategic communications firm Sard Verbinnen & Co, adding that he is seeing concern from companies in a wide range of industries.
“The week after the election it was non-stop meetings and conference calls and analysis,” said Kent Jarrell, crisis and litigation communication expert at APCO Worldwide. “It’s almost like a whole new Trump practice is developing.”
Corporate leaders, say the advisers, can no longer focus only on maximizing shareholder value; they must now also weigh national interest.
“CEOs are talking to their boards saying we’ve got to be viewed pro-America. If something is more on the margin – like layoffs, or moving manufacturing, then they are not going to do it,” said one Fortune 500 CEO, who said he had spoken with other U.S. companies.
TAKING A PAGE FROM TRUMP PLAYBOOK
Sard, of Sard Verbinnen & Co, said that while companies are well advised not to get into a Twitter war with Trump, his firm is advising clients to “learn from his playbook” and be prepared to communicate directly with shareholders, employees, and customers through blogs and social media.
There is already evidence that companies are quickly adjusting to the new Trump era. Firms have been more vocal in publicizing job creation and they have sometimes let Trump claim credit.
Fiat Chrysler Automobiles (FCHA.MI) (FCAU.N), the No. 3 automaker in the United States, announced plans on Sunday to create 2,000 U.S. jobs. The timing was partly influenced by CEO Sergio Marchionne’s desire to get the news out ahead of any possible criticism from Trump for the automaker’s overseas manufacturing, a person familiar with the company’s thinking said.
Trump has in the past few weeks attacked FCA’s two Detroit rivals, as well as Japan-based Toyota, for their manufacturing operations in Mexico and threatened to impose stiff border taxes on any imports.
In December, SoftBank Group Corp (9984.T), majority owner of Sprint Corp (S.N), unveiled a $50 billion U.S. investment at the Trump Tower in Manhattan. Trump and SoftBank head Masayoshi Son made the announcement together, and Trump later tweeted: “He would never do this had we (Trump) not won the election!”
“You never want to be against the president – especially not one as vocal as (Trump),” the Fortune 500 CEO said.
Trump on Twitter: tmsnrt.rs/2jf8zG8
(Additional reporting by Olivia Oran in New York, Liana Baker in San Francisco and David Shepardson in Detroit, Editing by Soyoung Kim and Ross Colvin)