Photographer: Seth McConnell/Denver Post via Getty Images

Trump Officials Court Foreign Money to Fuel America First Agenda

  • Foreign investors say U.S. business climate worse: survey
  • U.S. benefits from foreign direct investment, Mnuchin says

It turns out that President Donald Trump’s “America first” push needs some help from abroad.

After months of pledging to focus on U.S. needs, the Trump administration this week was hyping America as a top investment destination for foreigners during a government summit. The U.S. is courting companies to join public-private partnerships for a massive infrastructure upgrade and touting plans to slash corporate tax rates to create a more competitive business climate.

It’s not an easy ask: Globally and at home, investors have been faced with uncertainty as the administration struggles to advance its legislative agenda and sends confusing signals about its receptiveness to free trade and possible limits on foreign workers. Still, it’s hard for global companies to ignore the lure of the world’s biggest economy, which is about to complete its eighth year of expansion. There’s much to like these days in America’s economic outlook, including a strong job market, subdued inflation and low borrowing costs.

Yet against that backdrop is a growing pool of more anxious investors, who are trying to decipher the signals from an administration that is withdrawing from Paris climate accord, cracking down on immigration and threatening to impose tariffs on everything from imported steel to cars.

“I encourage you to invest in our great country,” U.S. Treasury Secretary Steven Mnuchin said at the SelectUSA Investment summit near Washington on Tuesday. “From manufacturing and infrastructure to financial services and technology, Americans benefit from having industrious and entrepreneurial foreign investors partner with us.”

Worsening Climate

About 40 percent of foreign-based companies say the business environment is souring, according to a survey of about 60 chief financial officers of the U.S. units of multinational companies in May and June by the Organization for International Investment. That’s more than double the share in 2014. OFII represents the U.S. operations of foreign-based companies such as Alibaba Group Holding Ltd., Samsung Group and Siemens Corp.

“It is certainly much more desirable to invest in the United States today than it is in many other countries. At this point, there has been no permanent damage done to that perception,” Pete Selleck, president of Michelin North America, said in an interview at the investment summit on Monday.

But “if the government does something to try to live up to a campaign promise or whatever, everybody will react. Everybody will react very quickly, and the consequences could be much wider than what people expect,” Selleck said.

Mnuchin and Commerce Secretary Wilbur Ross, a front-line champion of Trump’s trade agenda, have said they are eager to hear what business leaders have to say. In April, about a dozen executives from U.S.-based subsidiaries of foreign companies met with Mnuchin, Ross and members of Congress to talk about the benefits of foreign direct investment.

“We are now educating the administration on what the U.S. subsidiaries of foreign companies also do. We invest in this country,” said Mani Iyer, president of Mahindra USA Inc., a Houston-based arm of the Indian automobile manufacturer.

Investor Concerns

Part of that concerns of investors lies in regulations introduced during the Obama administration to curb inversion mergers and the uncertainty around trade deals such as the North American Free Trade Agreement, which is being renegotiated with partners Mexico and Canada, the OFII survey found.

Ross has said the Nafta revamp will serve as a template for future U.S. trade relations -- all with the common goal of seeking reduced trade deficits with America’s major trading partners by boosting exports. Investors worries have also been intensified by ideas that Trump’s flouted on imposing punitive tariffs and using currency manipulation designations to level the playing field.

Foreign direct investment supports 6.4 million American workers, with jobs paying an average $80,000 -- about 30 percent higher than the U.S. average wage, according to OFII. Any pullback in FDI could undermine Trump’s job creation plans for 25 million new positions in the next decade. Barely a third of the companies surveyed by OFII said they expect to increase employment in the U.S. in the next six months.

Investor Changes

With a more hawkish administration in power, some lawmakers are pushing for changes to America’s foreign-takeover review process that would make it harder for companies to win government approval for their investments, adding to investors’ worries. Republican Senator Chuck Grassley and Democrat Debbie Stabenow have proposed including top agriculture officials to the panel that reviews takeovers, to guard against threats to the nation’s food supply from foreign investment.

Mnuchin this week said that the U.S. panel that screens foreign investments for national security risks will not turn into an economic-benefits test, or unnecessarily block commercially-driven interests.

“I want to emphasize that we make our evaluations looking to national security as our guiding criterion -- we do not screen by industry or make blanket pronouncements,” he said, noting the importance of confidentiality and efficacy of the process. “The vast majority of foreign investment in our country does not pose unresolvable national security concerns.”

While the Trump administration’s position on foreign investment may still be a moving target, individual U.S. states are rolling out the red carpet. At this week’s conference, development agencies from Ohio to Alaska were aggressively promoting their states as attractive destinations for foreign capital.

Tim Vanderhoof, a senior vice president with economic-development firm Enterprise Florida, said he was unsure of what the impact of Trump’s America First agenda might be in the future. His firm announced a deal Tuesday to create 200 jobs in Florida.

“It’s yet to be seen until we get clear cut and defined policy,” he said. “Lowering the tax rate would be key in attracting all kinds of investment, including foreign direct investment.”

— With assistance by Andrew Mayeda

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