Trump's Tariff Threats Already Having "Big League" Effect As Companies Halt Outsourcing Plans

Tyler Durden's picture

Throughout the campaigning cycle, Trump sent a very clear message to businesses looking to move manufacturing operations offshore by repeatedly saying that subsequent imports would be hit with a massive 35% tariff.  Here is a December 4th tweet storm from the President-elect on the topic:

 

Therefore, it's not terribly surprising that, according to Bloomberg, Trump's messaging has already resulted in several companies postponing their plans to move overseas.

Ross Baldwin, whose San Diego-based firm Tacna helps U.S. companies set up manufacturing operations in Mexico, said three new clients put their plans on hold until they see what Trump does as president.

 

At the McAllen Economic Development Corp., which assists companies seeking to expand across the Mexican border from the Texas city, two of five companies currently considering a move have put the brakes on their plans because of Trump, said Keith Partridge, the development corporation’s chief executive officer.

Carrier

 

Meanwhile, in what Palin referred to a "crony capitalism," Boards across the U.S. are likely taking a "wait and see" approach on what kind of cost savings a Trump presidency can deliver in terms of lower corporate taxes and reduced regulations. 

“What they did in Indiana has made it clear to every board member in America that there is a clear and present danger in outsourcing” said Jim Courtovich, managing partner of the Washington public affairs firm Sphere Consulting, who said he has already heard from worried business executives.

 

GN Store Nord A/S looked into moving some hearing-aid production work from Minnesota to Mexico earlier this year but put the plan on hold because of U.S. campaign rhetoric, a person familiar with the matter said. GN wants to explore incentives to keep production in Minnesota and whether there would be penalties for relocating jobs to other countries, said another person. Both people asked not to be named because the discussions are private.

That said, other companies are pressing forward with outsourcing plans and hoping for the best.

Some companies are still moving ahead in shifting jobs. Rexnord Corp. is planning to move some 300 manufacturing positions to Mexico from a ball bearings plant just a mile away from the Carrier plant Trump visited. He attacked Rexnord on Twitter for “rather viciously firing” the U.S. workers. Rexnord didn’t respond to requests for comment about the tweet and its plans for the Indiana plant.

 

Baxter International Inc., a maker of health-care products, is moving some production from an Englewood, Colorado, plant to Tijuana, Mexico, according to a certified trade adjustment assistance petition filed by the state government. Some of the work is being done remotely by employees who have remained and “much of the work is being transitioned to third-party business partners in the U.S.,” Baxter said in an e-mailed statement.

 

Cardone Industries, a closely held auto-parts maker based in Philadelphia, is moving work to Mexico, affecting 1,300 jobs, according to a trade adjustment assistance petition filed by the company. Cardone’s human resources director didn’t respond to requests for comment.

You may agree or disagree with his policies but at least Trump is following through on this campaign promise, which is more than we can say for most politicians.

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J S Bach's picture

Humans are herd animals... easily prodded.  Corporations are no different.  It just goes to show that there ARE solutions to our problems.  It also goes to show that those at the top do not WANT solutions.  Tariffs steal their gravy.

wildbad's picture

it goes to show ya. this long term destruction was planned by exactly the same forces that are now trying to undo democracy in the name of democracy.

these communists will stop at nothing. murder and destruction is there credo

no quarter

TeamDepends's picture

Every job saved is a big Fuck You to Soros & Co. And Donald, find or create a different messaging media than twitter.

cherry picker's picture

I agree, but at least he is communicating.  Haven't ever seen or heard a leader like this before.  First real 'leader' in decades. 

It appears he has his fellow countryman at the top of his list to help out, although the liberals disagree, they may find Trump is not the enemy he is portrayed as.

Time will tell.

cheka's picture

article conclusion is dead wrong.  he is NOT keeping his promise -- he said he would tariff imports of co's that are already offshore - not threaten to tariff if you move current manufacturing.  BIG difference

highly disappointed

other than immigration and tariff he's garden variety neocon.  now he's walking back on the two things that got him elected

hope killary steals it.  that's the best result possible now -- piss off more people.  nyc pulled a good one with this trump character

cherry picker's picture

You must be joking.

He has to start somewhere and to stop the outflow now is a start.

Some companies are bring work back home.

The USA cannot survive providing unecessary 'services' to one another.

We are already saturated with PHD's who tell us what to do but who don't know how it really is.

Got The Wrong No's picture

He isn't in office yet so how can he impose tariffs? He is already saving jobs. You are an idiot.

Urban Redneck's picture

We should thank Obozo for fighting so hard to change every "job created" to every job "created or saved" - nothing like libtards being smacked in the face with their own hypocrisy and unintended consequences.

The subject of this article is not an unintended consequence, however.  The Carrier deal wan't just good politics and post election optics, it was a force multiplying exercise in soft power.  As I wrote last month- 

He's not jawboning specific businesses, he's publicly jawboning specific businesses.

Every Fortune 500 CEO will have a team assigned by the end of the post Thanksgiving week to gauge exposure and opportunities.

 

Skateboarder's picture

If Trump actually comes through and brings more manufacturing back home through heavy tax penalties, it would be a great boon to our country. Not holding my breath, but he's at least saying the right things. Then again, so did Obama when he said he would end the ME wars and bring the troops home...

We need more white collar and blue collar jobs to come back home. The knowledge/skills/wisdom transfer between the boomer and millennial generation has not happened in full as it needs to. Non-retiring boomers means fewer jobs for millennials, thus less mentoring. In work, one always needs a good teacher/friend/mentor, until the student himself becomes a master.

cheka's picture

note his rhetoric has changed.  he's not doing what he said, bringing jobs back.  he's just threatening current job offshoring plans.  big BIG difference

Got The Wrong No's picture

I bet you voted for Obama twice, didn't you?

Between Two Hedges's picture

This, combined with a repatriation of offshore tax money, and protection money from protected foreign nations, might, just might, reverse the US deficit.

Gnostech's picture

Rexnord, baxter, Cardone, I hoped you enjoyed being able to sell your products in America! Sad decision. Stupid leadership!

DemandSider's picture

Car parts retailers used to sell American made alternatives for a little more. Now, the more expensive alternative is usually foreign made, so I ALWAYS buy the absolute cheapest I can get, unless I can find an American made part online.

BritBob's picture

Don't outsource to Spain.

 

 

Spanish Guardia Civil vessel Rio Cedena twice tried to disrupt the visit by ballistic missile sub USS Florida as it was approaching the British Overseas Territory on the southern tip of Spain.


According to the 
Sun, the incident has caused outrage among senior officials in Gibraltar with one 'top source' saying: 'This is not only a very dangerous game for the Spanish to play but it is unbecoming of a NATO ally to treat the US Navy with such contempt.'

(Daily Mail 6 May 2016)

 

Looks like Spain will try and play the Gibraltar card  (A worthless sovereignty claim): Gibraltar - Some Relevant International Law: https://www.academia.edu/10575180/Gibraltar_-_Some_Relevant_Internationa...

 

Gibraltar is an important NATO base.

olebugger's picture

This will be GOLD for our economy, bringing home all these lost manufacturing jobs. Why should we let the Chinese workers get rich? Trump is right, bring home all these amazing jobs to our own country, we got enough underprivileged/minorities/immigrants who can do those jobs with little education.

cherry picker's picture

Your right, but that means working for a living.

I was driving with my son to El Centro once in 100+ degree weather.  Notices workers in the fields.  Not a white or black face amoung them.  All Mexicans and they were working hard.

Boscovius's picture

For those Hedgers who have read Ayn Rand's Atlas Shrugged,  you might appreciate the notion that with the election of Donald J. Trump, the producers of the nation have created a plot twist in the Storyline.  Instead of abandoning their various enterprises and setting up anew in Galt's Gulch, they seized the reigns of power in an all or nothing last stand. 

John C Durham's picture

Tariffs to protect America is a no no to the ignorant. Our market is so valuable that Tariffs used to support the entire Federal Budget. People want this market and if we give it away we are just being stupid.

The only way "to level the playing field" is WITH TAXATION on foreign goods of some type. There will be a whole army of tax collectors keeping everything up to snuff. The income tax can be like Lincoln's original, only taxing those incomes so high that they present a danger to the Republic. Let the foreigners pay an entry fee, starting now. Then you will see the high paying jobs come back overnight.

These remarks are simple history of America. Up until recently, ever since the Founders, we had protection in place. Now, we need a real banking system under Glass-Steigall restored. We need to bring the armed forces home and we will have our nation back and Peace again at last.

cherry picker's picture

The free shit army and public sector which is half or more of America's population are scared shitless.  They may have to actually work for a living with a possibility of having their exhorbitant 6 figure or more pensions and salaries reduced.

That is why they are blaminig Russia, they need a war and enemy to keep their McMansions.

In Canada I have to work 7 days a week to survive and resent some asshole with a degree so called working for the government, making a ton of coin, endless sick and holiday pay and bankers hours.  Meanwhile my effen governemt is taxing me through the roof.

I hope Canada is watching what is going on down there and does the same.  We can support ourselves quite easily with the natural resources we have without giving it away to other countries at far cheaper rates  than we can buy it for ourselves.

Squidbilly's picture
Squidbilly (not verified) cherry picker Dec 15, 2016 7:29 AM

yep, parties over bitches

Debt-Is-Not-Money's picture

The best motivation is starvation!

ultraticum's picture

Central planning writ large.

overmedicatedundersexed's picture

the word Tariff, is hate speech. nuf said.

overmedicatedundersexed's picture

Tariff's are the whitemans new chains on minorities, and are anti semitic.

 

overmedicatedundersexed's picture

tariffs kill the children

overmedicatedundersexed's picture

tariffs are a Russian plot

overmedicatedundersexed's picture

wash your childs  mouth out with soap.. if they say Tariff

monad's picture

Only if you're single-citizen American.

overmedicatedundersexed's picture

tariffs are homophobic

overmedicatedundersexed's picture

we must have safe spaces which are Tariff free

monad's picture

This plantation isn't big enough for the 2 of us.

fattail's picture

We have always had all the leverage.  What is a fixed asset in China worth when its products can't be sold to customers in a country that is 25% of global GDP?  $0. Zip.  Nada.  You want to lose 20-25% off your top line?  

How much food do the 3rd world peasants in those factories have in their pantry? 3 weeks? A Months worth?  how is a 1.4 million man PLA supposed to control 500 million hungry peasants.  They can't.  Which is why we have all the leverage.  Are they not going to buy our food?  Which is the only thing we sell them, everything else they just steal?  

Free trade is not when you print up your currency, manipulate it lower to get a trade advantage, issue it to banks with a directive to lend it out to your inside connected cronies, who use it to buy up productive resources and land, that they build factories on, where they pollute the air, land, and water so badly the government's own propganda arm cannot hide the "cancer villages", and employ 3rd world labor with no labor standards at slave wages.  That is fascism; one set of rules for the cronies; one set for the people.

Building excess industrial capacity by constantly pulling aggregate demand forward, and then dumping the excess product on the world market to crush private companies who can no longer service their debt, eliminating your competetion, while you just print up currency and recapitalize your banks is not free trade.

Free trade is just an excuse for corporations to rape and pillage the weak and powerless in third world countries.

What we want is reciprocal, open trade.

cherry picker's picture

But how else will the Kardashians survive?

They don't know how to do anything except swear, do porno and buy a lot of stuff and party.

DemandSider's picture

The PRC merely pegs it's currency to the dollar. The problem isn't that the yuan is undervalued, it's that the dollar is OVER valued through the petrodollar system and because international criminals are encouraged to park their cash in dollars.

fattail's picture

Obama is a bought and paid for corporate stooge.

Able Ape's picture

American companies have gotten THEIR way for too long - it's like they were robbing a bank, getting the money gift-wrapped and then being escorted out the door to a waiting limo after having a complimentary glass of Gout de Diamants champagne and then jetting off to the Maldives - fuck THAT shit!....

unklemunky's picture

I think we have all been snookered over the last several decades as to the advantages of "free trade". It's what they didn't say, about it being fair, was the point they left out. This also has been the chorus of the so called conservative pundits. It's good business to trade with your neighbor. But how can it be good business to buy something from some place in China while your neighbor could sell you the same thing? Well, when you get on eBay and you see a set of ball bearings made in US selling for $39 and same thing made in china selling for $5, what do you do? Since people are rational, they buy the $5 bearings. The $5 bearings need to go away if we are to survive. We have been subsidizing our own demise. They playing field is either fair or get the fuck out.

VW Nerd's picture

For years I have wondered how the US remains competitive in a low wage, high productivity world.  I have concluded much of it hinges on the global dollar banking monopoly and military hegemony.  After WW2, the three competing manufacturing powers, Japan and Germany and western Europe had been reduced to rubble.  The US was, for decades the primary producer of goods for the world.  The US dollar was literallly good as gold.  That's all changed.  Scapegoating countries who produce quality goods with a wage base and regulatory cost that's a fraction of the US  will not solve the US economic decline.  Protectionism will help some short term, but will solve none of the structural economic problems long term.  Trump will have to tell the parasites to find a new host.

yellowsub's picture

It's great but the mfg sector is dead, what is he doing about companies staying here and reducing full timer by outsourcing?

Phillyguy's picture

In capitalist economies the one and only goal is profit maximization. Companies outsource jobs because they save lots of money on wages which increases profit margins. The average US worker earns $15/hr compared with average Mexican worker who earns $2.43/hr (1/6 of US wages). This wage differential is even larger in Asia- US Factory Workers earn 76X more than workers in Indonesia (see: thehigherlearning.com/2015/04/09/u-s-factory-workers-make-76-times-more-per-hour-than-workers-in-indonesia). During his campaign, Trump’s signature slogan was to “Make America Great Again”, repeatedly issuing a series of vague and incoherent economic proposals and by inference, bring back decent paying jobs and improve the economic outlook for the average working American, a message that clearly resonated with many voters in “Fly over America” (See: www.philly.com/philly/news/breaking/20161205_Trump_voters_in_Pa__waiting_to_see_about_cabinet_picks.html). Donald Trump’s choice for Labor secretary Andrew Puzder, is CEO of a holding company that operates fast food outlets- Hardee’s and Carl’s Jr., who rely heavily on temp workers. (Link: www.nytimes.com/2016/12/08/us/politics/andrew-puzder-labor-secretary-tru...). Not surprisingly, Puzder opposes increases in the minimum wage, overtime pay, unions, etc. Should we assume that all of those disgruntled workers and Trump supporters in rust belt America are ecstatic about the prospect of landing a (“temp”) position at one of Puzder’s fast food outlets? Will this “Make America Great Again”?

Bottom line- with wage differentials this high and profits margins at stake, expect US corporations to continue outsourcing jobs, rhetoric to the contrary notwithstanding.