Last year, Corporate America was all about press releases announcing lofty U.S. hiring plans. The new fad is to threaten the reverse.
On Friday, General Motors Co. (GM.N) joined Harley-Davidson Inc. (HOG.N) and bourbon maker Brown-Forman Corp. in calling out the negative impact to their businesses from President Donald Trump's effort to use national security as an excuse to slap tariffs on goods imported from U.S. allies. GM said tariffs on imported vehicles and auto parts could lead it to employ fewer U.S. workers and have less of a presence in America.
It's notable that GM, like Harley-Davidson, was previously the subject of Trump praise. Back in January 2017, we got this tweet:
That was in response to GM's announcement that it will invest US$1 billion in the U.S. and create or retain 7,000 jobs, almost 2,000 of which in domestic factories. Like almost all of these job announcements, it was mostly fluff.
GM's "new" investment was largely really for models and plants that had already been in the works and represented spending GM would have done regardless of who was in the White House. The job plan appeared to be real, although I will note that not firing people is not quite the same as adding new positions. Just a short while earlier, GM had said it would cut 3,300 jobs at three plants in Michigan and Ohio because of a swing away from sedans toward pickups and SUVs. But as a public relations effort, the flowery language and big promises clearly had the desired effect.
There is likely an element of public relations to the more recent GM and Harley-Davidson announcements as well, but if the Trump administration wasn't willing to call out past bogus jobs announcements for what they were, they have little standing to undercut this latest round of press releases. And as Stephen Gandel pointed out earlier this week, the threat of Trump turning nasty on Twitter isn’t packing the punch it once did, anyway.
Corporate America can do self-interest even better than the president, and as any CEO of a public company that's battled an activist investor will tell you, patience isn’t considered a virtue when it comes to running a business.
Companies seek to maximize their profits, and in doing so, please their investors. So when it comes to decisions about jobs, investors — rightly or wrongly — may ultimately have more sway than politicians, barring a radical reversal of capitalism in America. And the uncertainty created by an escalating trade spat, not to mention the actual margin hit from retaliatory tariffs for some multi-national companies, is bad for profits and stocks. GM's supply chain isn't built for Canada and the European Union to be treated like enemies.
It’s unlikely that GM will be the last company to speak out against Trump's trade war. Canada is expected to impose tariffs on goods ranging from washing machines to maple syrup on Sunday in response to the U.S. steel and aluminum tariffs. China is expected to respond with retaliatory levies if the U.S. sticks with its plan to impose tariffs on US$34 billion of Chinese imports next Friday, July 6. Both occasions give companies another opportunity to speak out with the kind of press releases Trump won't want to celebrate on Twitter.