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.
The Donald Trump Trade Effect: Watch the Peso, Not Ford
Mexico’s central bank raised short-term interest rateshalf a percentage point in response to the peso’s 11% plunge since Mr. Trump was elected. The Bank of Mexico is worried that the depreciation will push up inflation, and by raising rates it will restrain spending and contain those price pressures.
.. This, of course, is the opposite of what Mr. Trump intends. On the campaign trail, he cited the elevated U.S. trade deficit as proof of how foreigners were cheating the U.S. through badly negotiated deals like the North American Free Trade Agreement.
.. But as I noted in a column a month ago, Mr. Trump’s fiscal and trade policies are in conflict. His plans to slash taxes and boost infrastructure spending will inflate the budget deficit and stimulate an economy already close to full employment. To prevent an outbreak of inflation, the Federal Reserve will raise interest rates more quickly, pushing the dollar higher. The combination of a stronger dollar and stronger domestic demand will curb exports and suck in imports, causing the trade deficit to widen.
.. Ford’s decision to keep SUV production in Kentucky instead of Mexico at the margin will reduce imports from Mexico. But that will likely matter less than if less Mexican consumption and a strong dollar hit U.S. exports. Those are the unintended consequences of Mr. Trump.
Clinton team calls bull on Trump’s Latino gambit
While Donald Trump dashes south to meet with Mexico’s unpopular president — a man with even worse favorability numbers than the GOP nominee
.. “The demographic trends make obvious that you can no longer win a presidential election in the new American electorate of 2016 with just white voters. You have to get a significant proportion of nonwhite voters — especially Hispanics
.. Trump’s favorability rating in Mexico, according to a recent poll from the El Financiero paper, is 2 percent.
.. “Perhaps the strategic play is not for more nonwhites,” he said, “but moderate Republicans who have yet to get on the Trump train because they don’t want to support someone perceived as being racist.”
Trump’s immigration rope-a-dope
After diplomatic turn in Mexico, a fiery immigration speech proves the GOP nominee’s moderation to be a ruse.
Having ditched his traveling press corps, Trump’s lie that he and President Enrique Peña Nieto didn’t discuss who would pay for his border wall wasn’t exposed until the Mexican president tweeted that they had a few hours later
.. Trump and his campaign had used Peña Nieto as a prop in an opening act that served only to set up an evening stemwinder. The farce was, in hindsight, clear even before Trump approached the mic, as two of his warm-up speakers, Rudy Giuliani and Jeff Sessions, donned Trump hats that read “Make Mexico Great Again Also.”
.. He reverted to the tough talk he was unable to muster on foreign soil just hours earlier about Mexico paying for the wall.
.. Toward the end of his speech, he used the personal anecdotes of mothers whose children were killed by undocumented immigrants to further demonize “illegals.”
.. Trump’s revived bombast and the 10-pronged list of immigration policy ideas were actually a clumsy effort to obscure the fact that he is no longer vowing to immediately deport every undocumented immigrant in the country illegally