While many Americans celebrated Carrier’s decision to keep 1100 jobs in the U.S., even some conservatives were critical of Donald Trump’s deal with the company.
Carrier has agreed to the arrangement in exchange for $7 million in tax incentives over the next decade, a deal that critics say interferes with the free market and makes government the arbiter of which companies receive special favors.
Of course, the people of Indiana are pretty happy about the deal, as Donald Trump found out when he toured a Carrier plant then gave a short speech, warning that there would be “consequences” for other businesses that tried to leave the U.S.:
Trump did not elaborate just what the consequences would be but during the election campaign he frequently threatened U.S. firms that his administration would put a 35% import tariff on goods made by American manufacturers who moved jobs offshore. As part of his “Make America Great Again” campaign, Trump has made keeping jobs in the US one of the main aspirations of his election campaign and frequently slammed Carrier for planning to move production to Mexico as he appealed to blue-collar voters in the Midwest.
Trump said his negotiation with Carrier would serve as a model for how he would approach other U.S. businesses that are tempted to move jobs overseas to save money – which likely means providing further tax concessions in exchange for keeping workers in the US.
Trump’s strategy is a “carrot and stick” approach: pledging lower taxes and fewer regulations to entice companies to stay, but penalizing them if they insist on leaving.
On the “good news, bad news” front, Carrier still plans to close two factories in the foreseeable future, but has also promised to invest $16 million in Indiana.
While those details are important, the fact that Trump saved over 1000 American jobs before even taking the oath of office is a strong symbol of things to come.
Credit: Zero Hedge