Donald Trump’s Carrier deal is bad for American business because businesses must now consider being punished by Trump for performing an act required by law; acting in the best interest of shareholders.
The Carrier deal is a prime example. Yes the deal saved 1,000 jobs. For now. But the deal also allowed Carrier to move more than 1,000 jobs to Mexico. The $7 million put up by taxpayers to save those jobs helped Carrier. Carriers owners, United Technologies, gets brownie points with Trump and an easier opening door to government when UT needs it.
But what if the only economic option for a company is to move a production line to a more affordable location anywhere other than the US? By law the company has to act in the best interest of its shareholders. Will taxpayers have to shoulder the expense of forcing an American business to keep its production in the US?
No company is going to agree to keep its employees in the US if by doing so raises the retail cost of its product or can be seen as not acting in the best interests of shareholders.
And you won’t find any factory workers willing to accept the same pay as someone in more low-cost labour country. No one will buy an American-made thingamajig for $20.00 when they can buy the identical item in the US for $8.00 but made by the same company in another country.
Will Trump order tarrifs on that $8.00 item to bring it up to par with the American made one? Who the heck wins with that deal? Certainly not the worker who suddenly finds he/she has a job but can’t afford to buy anything anymore. Do you think Trump is going to give the tariff money to workers to offset higher living expenses? Maybe he’ll take that extra tariff income and give workers a $100/month Trump card for you to spend at any of his businesses.
The result is the American taxpayer is going to be stuck with paying the bill for any Trump deal no matter what.
Instead of issuing threats of retaliation to American companies not obeying Trump’s utterances, Trump should be looking beyond immediate image enhancement and instead focus on long-term positive gains for American workers by making it easier for workers to upgrade their skills for employment in knowledge-based industries, and provide financial assistance to low-income and middle-class students so they may attend university and college in order to get a job in the future or create a business in the future.
Threats may have worked for Donald Trump when he was building properties, but Donald is in a whole new ball game where ill-prepared remarks and actions can have dire consequences for a country in the long term.