The chiefs of the American arms of a dozen big foreign companies, including Airbus, Panasonic and Samsung, have met with Donald Trump to highlight the amount of money they invest in the country and plead for care with any looming tax tinkerings.
The fact that Trump has been open to spending time with the CEOs could be seen as a welcome sign for the many concerned he’ll impose high tariffs on imports, potentially making their products less competitive. There’s been little indication so far, though, that the president is willing to substantially soften his protectionist stance.
Airbus, for example, may lose ground to archrival Boeing, should the American company’s operations receive more favorable treatment from the administration. It’s not entirely clear how much Trump’s tax plans would impact foreign companies such as Airbus that are based overseas, but still make some of their products at factories in the U.S.
Airbus, based in Toulouse, France, opened its first ever U.S. manufacturing facility in Mobile, Alabama in September, 2015. The plant is expected to produce between 40 and 50 single-isle A319s, A320s and A321s per year by 2018 and was intended to bring Airbus closer to its U.S. customers and component suppliers.
Still, should one of its U.S. customers want a larger, wide-body jet, such as an A330 or double-decker A380, the product would have to be imported.
House Republicans are suggesting the government fund a headline corporate tax cut by imposing a 20% “border-adjustment tax” that could perhaps sting products such as an Airbus A380. Exports, meanwhile, would be rendered tax free, giving Boeing a new competitive edge.
“We’re all facing a much stronger populist environment,” said Nancy McLernon, president of the Organization for International Investment, which organized the meetings, according to AP. “We want to ensure that foreign investment in the United States is not a blind spot.”
Foreign direct investment in the U.S. amounted to $396 billion in 2016, up 12% from 2015, according to the U.S. Bureau of Economic Analysis.
Panasonic America CEO Joseph Taylor said the line between products made overseas and at home isn’t always clear, given the complexity of global supply chains. One product, for example, might have some components made in America and others made in China or Mexico.
“Our supply chain extends to Japan to Spain to Mexico,” Taylor said. “You can’t just say, ‘We can do everything’ in one country.”
The failure of Trump’s healthcare legislation has brought tax reform to the forefront of his policy agenda. He is hoping to overcome divisions among lawmakers and CEOs about the need for a border-adjustment tax and push reform through by August.