Trump Warns on GOP Tax Plan Donald Trump criticized a cornerstone of House Republicans’ corporate-tax plan, creating another point of contention between the incoming president and congressional allies.
(…) Mr. Trump, in his first comments on the subject, called it “too complicated.” (…)
“Under the border adjustment concept, if somebody is making a motorcycle or a plane in our country, they’re getting a credit for the plane they make before they send it over to wherever it’s going,” Mr. Trump said. “And you don’t need that plus lower taxes and everything else. And it’s too complicated. They get credit on some parts and not other parts. Where was the part made? I don’t want that. I just want it nice and simple.” (…)
In his interview with the Journal on Friday, Mr. Trump said the U.S. dollar was already “too strong” in part because China holds down its currency, the yuan. “Our companies can’t compete with them now because our currency is too strong. And it’s killing us.”
The yuan is “dropping like a rock,” Mr. Trump said, dismissing recent Chinese actions to support it as done simply “because they don’t want us to get angry.” (…)
Republicans have been promoting their tax plan as an alternative to the “big border tax” that Mr. Trump proposes, which he has described as a 35% levy on goods made by companies that shift production out of the U.S. and then sell back in. Unlike the border adjustment, Mr. Trump’s suggested levy would only affect imports. (…)
(…) “When I tell Ford that if you build that plant, you’re going to leave Michigan, you’re going to go to Mexico, you’re going to build a plant,” he said. “You’re going to fire all your workers in the United States. You’re going to hire new workers. And if you think you’re going to sell your cars across the border and you’re not going to pay a tax, you’re wrong.
“The truth is there’s no tax because they’re not going to leave. There’s only a tax if they leave.” (…)
“So, what am I doing?” Mr. Trump asked rhetorically. “I’m not micromanaging. You guys are writing stories about it. And every other car company is staying.…I’m not going to even talk to the rest of the car companies. I don’t have to. But they’re not going to leave. So that’s not micromanaging.”
In effect, he argued, bigger jobs effects ripple out from one or two targeted interventions. (…)
Beyond ideological beefs, there are two practical risks in what Mr. Trump is doing. The first is that companies begin making questionable decisions about how to invest their money simply to avoid being the target of presidential ire, and in the process sap their long-term viability.
The second is that a company comes to the government seeking favors in order to comply with the presidential insistence that it not move, or shut down, an operation that doesn’t otherwise make economic sense. That dynamic was in play, at least in part, with Carrier, a unit of United Technologies Corp. It received state tax incentives to keep jobs in Indiana. (…)
Wal-Mart Touts Plan to Create U.S. Jobs, in Nod to Trump America’s largest retailer said it plans to create about 10,000 U.S. jobs this year, touting job growth ahead of Donald Trump’s inauguration. The jobs will come from previously planned store openings, store expansions and new e-commerce services.
(…) The announcement is the latest in a string of public displays from companies looking to head off criticism from the Trump administration about U.S. job losses. Last week Amazon.com Inc. promised to create 100,000 full-time jobs in the U.S. in the next 18 months mostly through expansion plans already in the works. (…)
In early 2016, Wal-Mart cut 10,000 store jobs after closing 154 U.S. locations and said 450 positions at its headquarters would be eliminated. Another 7,000 back-office positions were cut from stores later in the year.
(…) A proposal to apply a border-adjustment tax to products that are imported into the U.S. while exempting exports is encouraging businesses to re-examine their supply chains. Contract manufacturers, which make products or components based on a client’s specifications, say there has been an uptick in calls asking them about the possibility of shifting some production to the U.S. since the election.
“We are starting to get more and more requests to do more analysis,” said Mike McNamara, chief executive of Flex Ltd., a Singapore-based contract manufacturer with operations around the world. While it’s early in the process, Mr. McNamara says he expects some manufacturing to be relocating to the U.S. “The conversations are incrementally building,” he said. (…)
How Trump Could Unwittingly Gut Boeing’s Global Business Other US companies are equally vulnerable.
Fed Officials See Less Need for Government Stimulus Federal Reserve officials increasingly say they don’t see a need for stimulative government tax and spending programs to boost short-term economic growth, reversing their stance during and after the Great Recession.
(…) “I would say at this point fiscal policy is not obviously needed to provide stimulus to help us get back to full employment,” Fed Chairwoman Janet Yellen said in December.
To some observers, the turnabout appears political: Fed officials supported fiscal stimulus during the Obama administration but don’t as Mr. Trump takes the helm. However, central bankers see this as a return to normal now that the economy has healed. (…)
Did you miss The Lady and the Trump?
Eurozone export orders show improvement.
Source: @CapEconEurope (via The Daily Shot)
Is China’s GDP growth set to rise as suggested by the latest PMI figures?
Global economic surprise indices have all moved higher.
Source: @jbjakobsen, @josephncohen (via The Daily Shot)
(…) Saudi oil minister, Khalid al-Falih, told reporters in the United Arab Emirates that the market would rebalance by the end of the first half of 2017, according to media reports.
However, Mr. Falih’s comments suggesting the cuts could end after six months might lead to complacency from producers, Commerzbank said in a note. (…)