President-elect Donald Trump has already made it clear by his “actions” this past week that he’s going to try to shape industrial policy, one business at a time.
In a flurry of tweets, interviews and deal making, President-elect Donald Trump has made clear that he will take an active role in shaping industrial policy — one business at a time. He’s already shown off this approach with United Technologies, Boeing and SoftBank.
Last week, Trump triumphantly announced that he had persuaded Carrier, which makes heating and cooling equipment, to keep roughly 1,000 jobs at its Indianapolis factory from moving to Mexico. In exchange the company will get a $7 million tax break from Indiana and promises of tax cuts and less regulation from the Trump administration.
On Monday, Gregory Hayes, the chief executive of United Technologies, which owns Carrier, told CNBC that some of those 800 jobs would be lost to automation anyway. So, Trump saved what was actually 800 jobs temporarily, with taxpayer money.
Then there was Trump’s criticism of Boeing. In a tweet on Tuesday morning, he said the company was building a new Air Force One, “but costs are out of control, more than $4 billion. Cancel order!” Boeing’s stock fell sharply after the tweet, though it has since recovered.
The tweet came shortly after The Chicago Tribune quoted the chief executive of Boeing, Dennis Muilenburg, criticizing Trump’s campaign promise to cancel trade deals and increase import tariffs.
Turns out Trump’s tweet was wrong; the government has not yet placed an order with Boeing, one of the country’s largest exporters. The company has a $170 million contract, only signed early this year, to study new features for Air Force One planes, which are expected to cost much less than Trump wrote, with the big expenses connected to new security and communications equipment.
Finally, Trump claimed credit for a decision by SoftBank, a Japanese technology and telecommunications company, to invest $50 billion in the United States. He tweeted that the company’s founder, Masayoshi Son, “said he would never do this had we (Trump) not won the election!”
This, too, turns out to be wrong. SoftBank announced in October that it would raise a $100 billion investment fund, aiming to become the biggest investor in the technology industry worldwide — much of which is based in the United States, no thanks to Trump.
Michael Useem, a management professor at the Wharton School at the University of Pennsylvania, said he couldn’t think of any president in recent memory who targeted companies individually. “The president-elect’s intervention is a violation of a freely functioning economy,” he said, adding: “It is singling out a particular company for a particular management decision or practice.”
If business executives are worried about becoming the target of Trump’s pique, they aren’t speaking up. For now, the business world seems willing to praise Trump because they’re hoping for tax cuts and deregulation. “I think everything is very positive at the moment,” John Engler, president of the Business Roundtable, said about Trump on CNBC.
Maybe top executives think his policies will more than make up for his Twitter assaults. Certainly many will try flattery to put themselves in his good graces, and knowing Trump’s vindictiveness toward his critics, few will be likely to dare say a negative word. They are well aware that one bad tweet from him can send their stock prices tumbling.