The might of the American state usually supports U.S. corporations. But these days, a Twitter lashing by the President appears to be the nightmare that American CEOs dread. An adverse comment from @realDonaldTrump could set share prices southward, along with the personal fortunes of top executives.
Since his election, Donald Trump has arm-twisted corporations into decisions that suit his politics. Electronics manufacturer Carrier reversed its plans to relocate a plant from Indiana to Mexico. Boeing has agreed to renegotiate its price tag of nearly $4 billion for a plane it is making for the use of the President. Lockheed Martin CEO has promised to bring down the cost of the F-35 fighter plane programme, after Mr. Trump declared — on Twitter — that it was costing too high.
“I hear the message loud and clear,” said the CEO of Lockheed Martin. It is a different matter that the company’s promise to bring down the cost pre-dates Mr. Trump’s victory. Overturning decisions taken by his predecessor, Mr. Trump approved two oil pipelines, but with the condition that the pipes would be made in America. “I said, where is the pipe made? And they told me not here. I said that’s good — add a little sentence that you have to buy American steel,” he said last week, unveiling the Boeing 787 Dreamliner aircraft.
While conventional manufacturing giants, dependent on access to American consumer market and defence orders, are falling in line easily, tech companies, more attuned to and dependent on a globalised economy and society, are having a tough time. Leaders of several high-profile tech companies are immigrants, and their business models are dependent on skilled foreign workers. Ninety-seven tech companies, including Google and Microsoft, opposed in court the travel ban imposed by Mr. Trump on citizens of seven Muslim-majority countries, early this month.
Mending fences
But the tech czars had tried to mend fences with the new leader after opposing the tone and tenor of his campaign. A group of them, including Microsoft and Google executives, met Mr. Trump in December. “There’s nobody like you in the world,” the President told them. Last month, Google sponsored a reception in Washington, roping in 70 lawmakers, mostly Republicans.
Tech companies are not immune from government policies. In 2012, a Senate investigation found a legal, but the curious case of a Microsoft’s facility in Puerto Rico, making $4 billion in earnings with 177 workers. The company was routing its profits from sales all over the country through the Puerto Rican operation, saving $1.5 billion in taxes a year. The Republican Party plans to plug this window. Google is facing anti-trust scrutiny in Europe. Tech companies are trying to stay engaged with the Trump administration to ensure a favourable regulatory environment while simultaneously keeping their worker and customer bases happy by speaking out against anti-immigration and protectionist policies.
Meanwhile, activism is not turning out to be a smart branding gimmick for Starbucks. The coffee shop chain had announced that it would hire 10,000 refugees all over the world in the next five years, protesting Mr. Trump’s refugee ban. The move has negatively impacted its brand image, a recent study showed. American corporations might be hoping that the inherently contradictory objectives of Mr. Trump’s economic nationalism will unravel soon enough and rescue them. But Mr. Trump’s messages is clear: make in America, make it cheap in America and make it cheap in America without getting more workers from abroad.
Varghese K. George writes for The Hindu and is based in Washington.
