You are the owner of this article.
China and Mexico were sending back the U.S. jobs Trump promised before he started making deals

China and Mexico were sending back the U.S. jobs Trump promised before he started making deals


WASHINGTON — In some of the states where economic frustration propelled Donald Trump to the White House, the jobs he promised were already coming back before he started making deals.

For the first time in decades, areas of the Carolinas that had been crippled by the loss of the textile industry are getting some of those jobs back from China. Former mining towns in Pennsylvania have been revitalized by jobs at Bimbo Bakeries USA, Wise and Mission foods, which are Mexican-owned companies.

In fact, 6.1 million Americans are directly employed by majority foreign-owned firms, and more than 12 million American jobs are linked to foreign investment. These jobs pay one-third more than the economy wide average, 40 percent are in manufacturing, and there has been significant growth in Rust Belt states.

In other words, exactly the kind of jobs the president-elect promised to bring back.

While Trump’s tough talk on jobs leaving the country may have scored him an election victory, many worry that if protectionist tariffs and pressure on trade partners become reality, it could backfire on U.S. workers who rely on the growing number of jobs supported by foreign investment. Trump has also said he plans to renegotiate trade agreements like the North American Free Trade Agreement, which he described as “the worst trade deal ever signed,” and impose steep tariffs on imported goods.

It’s certainly not Trump’s intention to limit foreign investment in the U.S.

“President-elect Trump definitely gets the foreign investment benefits,” said Nancy McLernon, president and CEO of the Organization for International Investment, which represents the US subsidiaries of global companies. She pointed out his overtures to Japan’s SoftBank and Chinese e-commerce giant Alibaba.

Members of Trump’s incoming administration, including Vice President-elect Mike Pence as governor of Indiana, and Gov. Nikki Haley of South Carolina, have in the past aggressively courted foreign companies to invest in their states.

But some economists say Trump’s administration can’t have it both ways, touting protectionist policies and painting globalization as a threat to American workers while reaping its rewards.

A survey conducted for global management consulting firm A.T. Kearney last year found that the number of foreign companies planning to increase their investment in the U.S. could be reduced by 13 percent with a populist candidate such as Trump or Bernie Sanders in the White House.

“Isolating ourselves in a 21st century economy which is more globally connected than ever does not make the U.S. more competitive,” McLernon said. “Global companies succeed best in competitive markets.”

Taken at face value, Trump’s economic proposals “will result in a more isolated U.S. economy. Cross-border trade and immigration will be significantly diminished, and with less trade and immigration, foreign direct investment will also be reduced,” economist Mark Zandi wrote in a Moody’s report last year.

That impact would be felt in a state such as North Carolina, where U.S. subsidiaries of foreign companies employ nearly 7 percent of its private sector workforce — nearly 230,500 workers.

“Trade and investment are two sides of the same coin,” said Christopher Chung, chief executive of the Economic Development Partnership of North Carolina, saying that the impact of the latter is more visible. “They are investing in bricks and mortar and payroll, so it’s very easy to see the benefits, with more North Carolinians going to work.”

It remains to be seen how Trump’s threats go over with foreign companies once his administration is in place.

“I don’t think many people know what to make of Trump’s trade policies (as a) reality,” said John McDermott, who chairs the Economics Department at the Darla Moore School of Business at the University of South Carolina. “If you restrict trade and imports you’re going to limit exports … it’s all connected.”

Last week, Trump threatened to slap a 35 percent tariff on every car that German carmaker BMW imported into the U.S. unless it cancels its plans to build a plant in Mexico.

BMW’s largest plant in the world is in Spartanburg, S.C., which employs 8,800 workers. It exports more than 70 percent of its U.S. production. In addition to hundreds of suppliers, BMW and Michelin account for more than 75,000 jobs in the state’s civilian workforce of just over 2 million.

“People just don’t realize how many export jobs there are. South Carolina has remade itself amazingly from a state that relied on import good to export goods — tires, autos, aerospace, it’s a huge exports industry,” McDermott said. “What Trump is doing trying to influence the auto companies is just crazy — it’s all about deals and not markets. I don’t think he can possibly micromanage to the degree he’s used to in his own firm.”

When it comes to jobs that rely on foreign companies, tough protectionist policies could endanger more jobs than Trump can save.


Related to this story

Get up-to-the-minute news sent straight to your device.


News Alerts

Breaking News