Donald Trump’s hypocrisy on trade: he outsources and invests globally, but doesn’t want Ford to do the same?
When it comes to political hypocrisy and intellectual inconsistency, Donald Trump deserves a gold medal (captured in the Venn diagram above). At the same time that the billionaire businessman criticizes Ford for producing some of its cars in Mexico, and threatens to stop Ford’s expansion there and impose a 35% tariff on Ford’s imports from Mexico, he certainly has no problem taking advantage of the global marketplace when it comes to his own businesses. For example, some of the clothing for his signature Donald J. Trump Collection is produced in Mexico and some is made in China (see photos below).
Trump has also made significant real estate investments overseas, and he owns and operates more than a dozen properties in countries around the world including Panama, Brazil, Canada, India, Turkey, Uruguay, Philippines and South Korea. And that’s fine, both Trump and Ford should operate in a global marketplace and should base sourcing, production, and investment decisions on what makes sense economically, not politically. But for Trump to operate, outsource and invest globally while criticizing companies like Ford for doing the same is the ultimate hypocrisy. To be fair to Ford, Trump should either agree to impose a 35% tax on Trump Collection clothing and agree to stop investing overseas, or he should stop criticizing Ford for operating as a global automaker.
And as a businessman, Trump should know better when he starts proposing punitive tariffs on Mexican imports. First of all, that’s probably illegal to impose a 35% tariff since Mexico is our trading partner under the 1994 NAFTA agreement, which eliminated barriers to trade (including almost all tariffs by 2004) and investment among the US, Canada and Mexico. Second, a 35% tariff on imported vehicles from Mexico, even if legal, isn’t really a tax on domestic automakers like Ford; rather it’s a punitive 35% tax imposed on American consumers who would be forced to pay much higher prices for cars and trucks made in Mexico.
American consumers, businesses, and investors like Donald Trump have all unquestionably benefited greatly from increasing globalization and the expansion of free trade, and everybody should just ignore the hypocritical political nonsense and tired protectionism being promoted by Mr. Trump about international trade.
Those are some of the comments I shared with Stuart Anderson earlier today, who just published an excellent op-ed this afternoon for Forbes titled “Trump The Hypocrite: Investing Overseas Fine For Him,” here’s a slice:
Donald Trump’s appeal is said to be his straight talk. But when it comes to international trade, he sounds like a hypocrite, the classic “Do what I say, not what I do” politician.
While bashing companies for investing in foreign countries, Donald Trump’s own company has shown no inclination to invest and build only in America. In fact, a significant percentage of his company’s hotels and major real estate properties are located abroad.
“Mr. Trump is either inexcusably hypocritical or inexcusably ignorant of economics,” according to Donald J. Boudreaux, a professor of economics at George Mason University. “There is zero economic difference between, say, a U.S. car company’s investments abroad in factories and Mr. Trump’s own investments abroad in hotels: both are meant to improve the bottom line of companies headquartered in the U.S. by taking advantage of profitable economic opportunities outside of the U.S.”
Yet a staple of Trump the candidate’s speeches has been to bash Ford Motor for building a plant in Mexico. “Trump has repeatedly said that if elected, he would not allow Ford to open a new plant in Mexico,” reported the Detroit News. “At his campaign announcement speech in New York in June, Trump said he would call Ford CEO Mark Fields to explain the ‘bad news.’”
“Let me give you the bad news: Every car, every truck and every part manufactured in this plant that comes across the border, we’re going to charge you a 35% tax,” Trump said. “They are going to take away thousands of jobs.”
“When it comes to political hypocrisy, Donald Trump deserves a gold medal,” said Mark J. Perry, a professor of economics at the University of Michigan-Flint and creator of the economics blog Carpe Diem. Perry notes Trump has imported clothing from China and Mexico produced for his brand.
As economists such as Don Boudreaux and Mark Perry point out, there is no real difference between a U.S. car company investing in a foreign country and a real estate company building a hotel or office building in a foreign country.
If one argued the way Donald Trump argues on the campaign trail, then one could say that Donald Trump is costing America jobs by building hotels and commercial real estate in foreign countries instead of in the United States. In theory, the same money used to build and staff more than a dozen properties abroad could have supported thousands of jobs in America.
Donald Trump and his executive team believed a better use of the company’s capital was to invest its money abroad rather in the United States and that those investments in foreign countries would be more profitable.
There is nothing wrong with the company Donald Trump leads investing in other countries. However, there is something wrong when he attacks the head of another company for doing the same.