Donald Trump Warns of Penalties If U.S. Firms Take Jobs Abroad

He offered a carrot-and-stick approach to enticing companies to remain—a plan to lower the corporate tax rate to 15% from the current 35%; a drastic cutback in regulations; and steep penalties such as import tariffs for companies that move jobs out of the U.S.

.. What Mr. Trump described as his ability to bring outsourcing corporations to heel has emerged as a compromise that will see a break on corporate taxes in exchange for a commitment to keep some, but not all, manufacturing jobs from leaving.

.. Carrier has previously said it expected to save about $65 million a year by shifting the Indianapolis plant’s operations to Monterrey, in the state of Nuevo Leon, where wages average about $11 a day. The average wage of the Indiana jobs that will be retained is more than $30 an hour

.. The union said the hourly wages at the plant, which currently range from $18.82 to $30.81, would have to drop below the U.S. minimum to match the company’s estimated costs savings in Mexico.

.. The economy currently loses nearly 7 million jobs a quarter through the churn of companies failing, closing or leaving the U.S., Mr. Wolfers said, citing data from the Bureau of Labor Statistics. “Firms contracting or leaving a market is the natural state of business.”

.. The more pressing issue for the incoming administration would be to find ways to encourage more private job creation, rather than trying to intervene to prevent individual firms from leaving or shutting down. “Deal-making is not macroeconomic policy,” Mr. Wolfers said. “We should understand it’s politics, not economics.”

.. A study published by the Peterson Institute for International Economics estimated that imports from Mexico have displaced 203,000 jobs a year, but the two-way trade has also supported 188,000 jobs due to U.S. exports headed to Mexico. That’s a net 15,000 jobs lost annually—a tiny fraction of U.S. employment, according to the 2014 study.