Trump warns there will be consequences for companies heading overseas
United States President- elect Donald Trump yesterday warned that the Government would punish companies seeking to move operations overseas with “consequences”, setting the stage for an unusual level of intervention by the White House into private enterprise.
Trump’s remarks came as he triumphantly celebrated a decision by the heating and air- conditioning company Carrier to reverse its plans to close an Indianapolis furnace plant and move to Mexico, helping keep 1100 jobs in Indianapolis. About 800 of those were manufacturing positions that had been scheduled to move south of the border, said a person familiar with the negotiations.
An additional 300 to 600 Carrier positions at that plant, as well as roughly 700 jobs at another facility in the area, will still be cut.
Under the terms of the agreement, which have not been finalised, Carrier would receive a US$ 7 million ($ 9.9m) tax incentive package from the state of Indiana in exchange for making a US$ 16m investment in the facility — although Trump said yesterday that amount would probably be higher.
In remarks delivered inside the Carrier facility, the President- elect said more companies would decide to stay in the US because his Administration would lower corporate taxes and reduce regulations. He also warned that businesses that decided to go abroad would pay a price through a border tax on imported goods.
“Companies are not going to leave the United States any more without consequences,” Trump declared. “Not gonna happen. It’s not gonna happen.”
Trump said he decided to intervene after watching a television news report that reminded him that he had vowed during the campaign, “We’re not going to let Carrier leave.” Trump’s determination to use a mix- ture of incentives and tariffs to keep jobs from going overseas represents a sharp break with the free- market wing of the Republican Party, including senior congressional leaders.
Top Republicans offered careful responses to the Carrier deal.
“I think it’s pretty darn good that people are keeping their jobs in Indiana instead of going to Mexico,” said House Speaker Paul Ryan, emphasising that the party is hoping to pass comprehensive tax changes that would be a boon to all businesses.
The Carrier deal was sharply criticised by some conservatives, who viewed it as government distortion of free markets, as well as liberals, who derided it as corporate welfare.
Vermont Senator Bernie Sanders, who ran for the Democratic presidential nomination, accused Trump of reversing course on a pledge to punish companies that outsource manufacturing jobs. In the case of Carrier, Trump had said he would force the company to “pay a damn tax” if it closed the plant.
“Instead of a damn tax, the company will be rewarded with a damn tax cut,” Sanders wrote in the Washington Post. “Wow! How’s that for standing up to corporate greed?”
Meanwhile, Trump said yesterday that he would nominate retired Marine Corps General James Mattis, known as “Mad Dog” and renowned for his tough talk and battlefield experience in Iraq and Afghanistan, to lead the Pentagon.
“We are going to appoint Mad Dog Mattis as our Secretary of Defence,” Trump told a rally in Cincinnati. He said the formal announcement would be made on Tuesday.
The choice of a seasoned military strategist would be another indication that Trump intends to steer US foreign policy away from Barack Obama's increased reliance on US allies to fight Islamist militants and to help deter Russian and Chinese aggression in Europe and Asia.