Trump, Trade and the Art of the Spiel
There are billions of reasons to be skeptical whenever President Donald Trump and his White House team roll out headline-worthy trade deals and job announcements.
Take the president's visit to China, for example. Trump announced $250 billion of deals there on Thursday, and he and Chinese President Xi Jinping described them as "win-win" transactions full of economic benefits for both superpowers.
But as a Bloomberg News article reported, "The roughly 15 agreements unveiled on Thursday are mostly non-binding memorandums of understanding and could take years to materialize — if they do at all."
One of the marquee announcements involves a joint Chinese-American venture to develop a liquefied natural gas project in Alaska. That one clocks in at $43 billion on paper. It will take years before any contracts are even signed, however. Sinopec, a major Chinese oil and gas company that's a potential partner in the venture, simply said the project was a "possibility."
Another big component of Trump's $250 billion wish list is an agreement by China Aviation Supplies Holding Co. to buy $37 billion of aircraft from Boeing Co. Yet it isn't clear how many of the 300 planes involved amount to new orders.
Moreover, after hammering China for unfair trade practices throughout his presidential campaign, Trump hasn't forced China to make any concessions. He'll leave China without having secured greater access to Chinese markets for American companies. He'll also depart without tangible policy commitments that might reduce the U.S. trade deficit with China, which the president routinely bemoans.
Promoting a trade wish list isn't so much a deal as it is a spiel, and Trump has been spinning about deal-making since he won the presidency a year ago and for decades before that.
Remember Carrier Corp.? Shortly after Trump was elected last November, he intervened to stop about 1,000 Carrier jobs from moving to Mexico from the company's headquarters in Indianapolis in exchange for about $7 million in tax breaks.
"These companies aren’t going to be leaving anymore. They’re not going to be taking people’s hearts out," Trump said in December at press briefing in Indianapolis after Carrier decided to hold onto the jobs. "They’re not going to be announcing, like they did at Carrier, that they’re closing up and they’re moving to Mexico."
Here's what's actually happened. Fox News reported on Wednesday that Carrier plans to lay off 215 employees in January (which follows 340 job cuts less than four months ago). Carrier employees say they aren't confident about job security and they are unsure whether the entire Carrier plant will even stay in Indianapolis.
"Trump came in there to the factory last December and blew smoke," Brenda Darlene Battle, a former Carrier employee, told The New Yorker in July. "He wasn’t gonna save those jobs."
Shortly after claiming that he'd come to Carrier's rescue last year, Trump claimed credit for inducing a Japanese company, SoftBank Group, to invest $50 billion in the U.S. in order to create 50,000 jobs here. As my Bloomberg Gadfly colleague Tim Culpan noted at the time, that announcement overlooked the fact that it derived from a previously announced, larger investment that had nothing to do with Trump.
Culpan went out on a limb and predicted that the $50 billion figure "won't be deployed by SoftBank in U.S. startups in our lifetime."
Culpan also skewered another highly touted Trump "deal" from last summer that was marketed as a job creator and a source of massive foreign investment — but is likely to be neither. That one involved luring Taiwan's Foxconn Technology Group to Wisconsin in exchange for $3 billion in tax incentives (or about $519 for every citizen in Wisconsin). Foxconn certainly got a good deal, but it's not clear that Trump or Americans did.
Last week, Trump did a joint presser from the Oval Office with Broadcom's chief executive and the pair touted the news that the chipmaker planned to incorporate in the U.S. rather than remain in Singapore. The announcement came on the same day that the House of Representatives unveiled plans for a big corporate tax cut, the implication being that the prospects for tax relief got Broadcom to commit its billions to the U.S.
As another Gadfly colleague, Brooke Sutherland, pointed out, however, Broadcom had already been eyeing mergers in the U.S.; tax breaks it had enjoyed in Singapore were set to expire, so the company had its own reasons for incorporating here. Trump also had trouble with math on this one. He claimed that Broadcom would bring $20 billion in annual revenue back to "our cities, towns and the American workers." But only $1.1 billion in Broadcom's revenue came from the U.S. in fiscal 2016, and, as Sutherland noted, the government taxes income, not revenue.
We could cut the president, who was a serial bankruptcy artist during the height of his own deal-making period decades ago, some slack on the math. After all, during the same week that he and his Commerce secretary, Wilbur Ross, were jointly boasting in China about the billions of deals they had secured there, Forbes reported that Ross had lied to the magazine about his own wealth, inflating it by about $2 billion. It's hard to keep track of billions, as Trump himself knows after spending years inflating his own claims to billionairedom.
But we shouldn't cut the president any slack about sacrificing his credibility around pivotal issues like job creation and economic growth because he wants to make good on campaign promises he's having difficulty fulfilling.
Trump's China visit isn't a $250 billion payday because the president and his White House didn’t do the kind of planning and strategizing ahead of the trip that might have made an outcome like that possible. And that's why the trade deal with China is just a big nothingburger. Or maybe a Trump Steak.
To contact the editor responsible for this story:
Jonathan Landman at firstname.lastname@example.org