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Tags: trump | china | tweet | deal

Trump Seeks to Show China 'the Art of the Deal'

Trump Seeks to Show China 'the Art of the Deal'

(Getty/Andrew Burtin)

Dr. Edward Yardeni By Wednesday, 07 December 2016 11:44 AM Current | Bio | Archive

President-elect Donald Trump used his Twitter account very effectively to counter his opponents in the mainstream media during the primaries and the presidential campaign.

It was widely expected that he would tone down his tweets if he won. Instead, he has expanded them to function as a foreign policy tool.

The Chinese were incensed when the POTUS-elect last week accepted a call from Taiwan’s President. That violated the “One China” policy, which the US has long accepted. Yet the US has been a major provider of arms to Taiwan to deter any invasion by the Mainland.

Trump, in two tweets late Sunday, accused China of keeping its currency artificially low and of military posturing in the South China Sea--home to a tense territorial dispute. “Did China ask us if it was OK to devalue their currency (making it hard for our companies to compete), heavily tax our products going into their country (the US doesn’t tax them) or to build a massive military complex in the middle of the South China Sea? I don’t think so!,” Trump said on Twitter.

That all actually makes sense, but it does break diplomatic protocol and disturbs the status quo.

After Trump won, I called him a “disestablishmentarian.” In other words, he takes great pride and pleasure in knocking down the status quo. However, poking sticks in a hornets’ nest can have bad consequences. So can wounding a dragon. The Chinese might either respond in a way that makes things worse or they might learn how to play “The Art of the Deal” game with the Donald.

An example of how the game can be played effectively to deliver a win-win deal was described by Greg Hayes, the CEO of United Technologies, the parent company of the heating and air-conditioner manufacturer Carrier. Last month, Carrier agreed to keep more than 1,000 jobs across two locations in Indiana following pressure from Trump, who wanted to make good on a campaign promise. The decision was touted as a win for the incoming President, who had pledged to keep the jobs from moving to Mexico.

On Monday, Hayes appeared on CNBC’s “Mad Money with Jim Cramer.” He discussed the comparative advantages of moving jobs to Mexico and the reason behind his decision to keep those jobs in Indiana. However, the ultimate outcome of the deal, according to Hayes, is that there will be fewer manufacturing jobs in Indiana. (So it is really a win-win-lose deal.)

Unlike Trump during the campaign, Hayes had some very good things to say about Mexicans. They are happy to work on assembly lines. They are very dedicated workers, with absenteeism running around 1% and turnover about 2%. Their pay is roughly 80% less than for an American worker. Here is the kicker, according to Hayes:

“[I]f you think about what we talked about last week, we’re going to make a $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost of labor? No. But we will make that plant competitive just because we’ll make the capital investments there. But what that ultimately means is there will be fewer jobs.” Ironically, Carrier received $7 million in tax breaks to stay in Indiana. That’s money that will be used to automate production!

On Monday, Amazon Go opened for business. The new stores, which use state-of-the-art technology, require an app to enter them. Shoppers put what they want in their shopping bag and walk out without having to wait in line for a cashier. The front page of yesterday’s New York Post blared in huge letters: “The End of Jobs.”

Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research.

© 2022 Newsmax Finance. All rights reserved.


EdwardYardeni
President-elect Donald Trump used his Twitter account very effectively to counter his opponents in the mainstream media during the primaries and the presidential campaign.
trump, china, tweet, deal
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2016-44-07
Wednesday, 07 December 2016 11:44 AM
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