Investment deals in Donald Trump are a mirage

Hello readers. If there is one thing, US President Donald Trump has more than the size of the crowds in his careers, it is the level of investment pledges he obtained from companies and countries.

The White House maintains a list of the second president’s deals on A. Web page entitled Trump’s effect. The Supreme Commander recently claimed that the obligations have already exceeded 10 meters, which proves that his plans to raise a manufacturing boom dependent on customs tariffs in America will pay its fruits. This week, I confirm his allegations.

The White House list is undoubtedly impressive. However, the $ 10TN number – which Trump cited early last month – is misleading.

For beginners, in mid -May, Goldman Sachs estimated that companies have announced plans to invest more than a billion dollars over several years, as foreign governments pledged 4 Americans. This comes to a number of still at least 6 meters – approximately 20 percent of the American economy. (Other obligations have also been made since Goldman’s analysis.)

The cumulative value of the total foreign investment ads for foreigners in Greenfield-which embodies the capital allocated to new facilities and operations-is already submitted to its location in the equivalent point in the first Trump state and the management of Joe Biden, according to the data of the foreign direct investment markets, a database owned by FT.

But how many of this really happens?

First, the pledges, of course, are not the same investments achieved. It is customary for companies and countries to announce the projects early from the president’s mandate in favor of Carrie with their management.

Given the promises made during the first period of Trump, Goldman Sachs estimate that 80 percent of investment obligations are actually fulfilled. Although it is strong, this includes some prominent projects that lack their goals. Alibaba canceled a plan to be revealed in January 2017, 1 million jobs are scheduled to be created. Foxconn has reduced the Wisconsin investment plan from $ 10 billion to only $ 672 million.

The incentive to decorate the investment plans is stronger in Trump’s second state, given its widespread definition threats. “The US partners have a record dating back of the eighties of the last century of mitigating trade tensions and fears from the United States by committing a direct investment,” Matt Jerten, the chief strategy in BCA Research. “After reviewing the main elements on the White House list, we find that many of them are already extra and intended for political influence.”

This is supported by data from the foreign direct investment markets. The group also tracks indications that a foreign company may consider investment, such as a new investment strategy. And you find that the signals for investment in the United States, as a share of all the global signals made by companies, have jumped to the highest levels since more than a decade until now this year.

This indicates that the 80 percent transfer rate is very unlikely.

But the White House balance is also deceived in other ways, according to the analysis of the Kato Institute. “The list includes previously planned projects that are already going on,” says Scott Lincum, Vice President at the Thinking Center. “Other items have a classic maneuvering room, such as mysterious time frames, or conditional on the economic environment.”

Some of the bigger obligations are already curious. Apple has promised to invest $ 500 billion in the United States during the next four years. However, only 10 billion dollars spent on capital spending and $ 31.4 billion on research and development Globally Last year, Goldman Sachs notes. NVIDIA 500 billion dollars is similarly doubtful.

For companies, the gap between the promised and current investment indicates that the numbers that are entitled “can be strengthened by partnerships, acquisitions or production costs. As for promises from countries, both Saudi Arabia and Qatar” deals “include the purchase of American goods, which enhance American exports, not investment.

This raises a wider point: large investment numbers do not necessarily translate into GDP or job gains.

Interestingly, investment ads have not made significant promotions of capital expenses at the company level. Nearly 70 percent of the stock analysts in Goldman Sachs, who cover companies with recent investment promises, say that pledges are mostly interfered with previous plans.

“The expectations for investment and economic growth have not changed in response to these advertisements,” says Mawody’s chief economist at Moody’s Analytics. “If there is anything, the basic engines for investment are heavily weakened by the global trade war.”

Whether it is really new investments or not, it is possible that many projects will be overcome due to uncertainty. In fact, the BCA Research Index on Business Investment Interests throughout the United States in the recession region.

In the form of an indication, it appears that the U.S. building boom, which is associated with the law to reduce inflation and the law of chips and science, has a climax. Trump hated the well -known for the Biden era initiatives Create uncertainty About their tax credit and subsidies. Investing in the framework of both programs is pointed with the spread of 2024 elections for a document.

The lack of clarity on the definitions in particular greatly reduces the chances of successfully withdrawing any new building plans. Import fees are subject to White House negotiations with trade partners in America, and now the courts also.

The transfer of manufacturing production involves fundamental fixed costs, often in complications of average total operating surplus. Rights of rational management will not risk years of profit by opening on the new facilities if the tariff rates turn again and make the investment less competitive. In many industries, US production costs are much higher than the first three countries that are currently exported to the United States, according to Goldman’s analysis.

Each of Trump’s plans for the sector and the imposition throughout the country is important here. For example, car manufacturers who are weighing whether to jump on the tariff wall needs to maintain the tabs on the fees related to their inputs, such as steel and copper.

Beyond definitions, there are other specific factors. More than two -thirds of manufacturing companies that are considering producing more commodities in the United States indicate the availability of qualified workers as a great disturbance, according to the recent bank of Bank of America reconnaissance.

The broader management assault on universities and the risk of research that undermines access to high skills workers, while disruption on uncomfortable immigrants will collide with the workforce in construction. The permit operations are also slow, notorious.

Then there is Section 899, which is a ruling in the Trump Bill Law Law, which gives the Treasury Secretary the ability to set retaliation taxes on the foreign investment received. the Tax Corporation It is estimated that more than 80 percent of foreign direct investment shares in the United States come from countries covered by legislation.

Everyone said that the obstacles that prevent the completion of any suggested factory construction, the launch of products or employment during the second period of Trump’s second state. Even if the projects occur, the desired results may not be presented.

Morris Otold, an older colleague at the Peterson International Economy Institute, looked at Kimberly Clark from Kimberly Clark last month, who says he is linked to the strategic restructuring plan and a cost reduction plan a year ago. “While Kimberly-Clark definitely wants to expand its manufacturing ability in the United States, the new facilities that have been announced seem very automatic and will necessarily use high-skills-not-Skin-not jobs that have been promising Trump.”

In fact, since the costs of production and the availability of employment are essential fears, it is unlikely that the American reset is a great employment. “It is likely to compensate for those that end the retail costs associated with increasing automation,” adds Bofa Global Research.

Trump is not alone in overcoming investment pledges. Most of the presidents do so. the Biden Harris The White House described more than one dollar in private sector obligations, although many projects are delayed or temporarily stopped.

However, the contradiction between the list of investment ads in this current administration and what is actually happening is one of the most exaggerated, given the status of policies of transactions and transactions.

The net total investment can appear terrible by the end of Trump’s second term, if it continues as it started. Currently, local capital spending projects are largely suspended. It may pick up foreign direct foreign investment projects as companies try to avoid reprisal measures on the United States. Car manufacturers are considering switching to China, given their strangling Rare.

Over time, there is a reason for optimism. For some companies and countries, the announcement of investment plans in the United States is a long -term strategic play to gain exposure to its market and unparalleled technology (even if the circumstances are not at the present time). “Some pledges indicate the desire to benefit from the promise of the future trend in the future to avoid the truth of the threats close to the period,” says Clayton Allen, the American director of the Eurasia Group. If the policy stabilizes, it may stimulate sleeping projects.

At the present time, however, Trump’s investment deals are largely a mirage.

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