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Trump’s Industrial Policy, Part II

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Good morning.

My post yesterday about Trump’s industrial policy was followed within hours by an announcement from Ford that it will kill a planned $1.6 billion auto plant in Mexico and increase employment at a Michigan plant by 700 people instead. CEO Mark Fields said it was the right decision for the business, but also called it a “vote of confidence” in Trump’s economic agenda.

Expect more companies to follow suit. The combination of Trump’s big stick – his bully Twitter pulpit plus the threat of punitive tariffs – combined with his even bigger bag of carrots – potential reductions in taxes, particularly on repatriated earnings, and in regulations – is a powerful combination. It’s only a matter of time before Apple, IBM, and other companies follow suit.

Never mind the fact that Trump’s attacks on companies are neither very precise nor entirely fair. Yesterday, he went after GM – whose chief executive Mary Barra sits on his jobs council – for selling Chevrolet Cruzes assembled in Mexico to U.S. car dealers, when in fact almost all of the Cruzes sold in the U.S. last year were assembled in Lordstown, Ohio. As we now all know, factual accuracy is not the President-elect’s strong suit.

Historically, this sort of meddling in markets was decried by free-market conservatives on the right. Yet Trump’s latest moves are being criticized mainly from the left – with press outlets like Salon (Trump’s latest con job), Slate (Ford isn’t adding American jobs because of Donald Trump), and MSNBC arguing Trump is exaggerating his own role, or that the number of workers involved is relatively small.

What these critics miss is that after decades of debating the merits of first Japanese-style and then Chinese-style national industrial policies, the U.S. suddenly has one of its own. Even before assuming office, Trump has tilted the playing field in a significant way. And it is going to be fascinating to watch the results.