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Defense industry giants have good reason to watch Trump's Carrier deal closely

At first, Donald Trump's election had the market buying up defense contractor stocks, but the Carrier deal has led some to wonder whether those companies might actually face rising scrutiny from the new administration.

Trump was involved in negotiating an agreement to keep about 1,000 jobs in Indiana in exchange for $7 million in tax incentives from the state over 10 years. But it was actually fear that Carrier's parent company might lose its contracts with the federal government that sealed the deal, John Mutz, a former Indiana lieutenant governor who sits on the board that offered the tax breaks, told Politico and others.

United Technologies, which owns Carrier, did not immediately respond to CNBC's requests for comment.

In addition to selling air conditioners to U.S. homeowners, United Technologies also sells billions in jet engines, helicopter components and many other goods and services to the federal government. Those transactions amount to about 12 percent of the company's annual revenue. And that's on the small side — some other big defense contractors rely on government contracts for more than half their sales.

Major contractors are no strangers to offshoring their businesses. Many of the biggest names have shown up in Trade Adjustment Assistance (TAA) filings, which workers can use to gain relief after losing their jobs to offshoring.

Raytheon, for example, decided to move its aircraft wiring harness manufacturing from Kansas to Mexico in the early 2000s. Boeing held out longer for its commercial planes, but said last year that it would finally be building a new factory in China. According a TAA filing by a union representing the company's workers, Boeing has been instituting a plan to outsource work to Australia, Canada, Mexico, Russia and India.

Lockheed Martin employees making F-16 aircraft parts also lost their jobs in 2004 when the company opted to shift production to Israel, according to a TAA decision. And Carrier itself is still expected to move some jobs to Mexico, where it already employees thousands of workers.

Although federal rules require that some products be produced to some degree in the United States, most manufacturers face pressure from cheaper competition abroad. TAA investigators found that a Pennsylvania General Dynamics factory producing mortar shells had to lay off workers after a competing company began making them in Canada instead.

After the election, shares in every single one of the companies above were beating the market (excluding Bechtel, which is private). In the last three days, six out of eight have fallen and five lagged the S&P 500. An index weighted by reliance on government contracts also shows a very slight dip.

So did the president elect's involvement put federal contracts on the line for United Technologies, either directly or indirectly?

In a statement on Wednesday, Carrier attributed the decision to the administration's promises of support and the tax incentives offered by Indiana. The Trump campaign and transition team did not respond to CNBC's questions about whether the parent company's extensive federal business was mentioned in the negotiation.

Trump himself did not outline the details of promises or threats made to Carrier in his speech in Indianapolis on Thursday, but mentioned that the company would be gaining "goodwill" and business from customers who appreciated the decision. He also threatened taxation at the border for other companies that did not stay in the country.

"Companies are not going to leave the United States any more without consequences, it's not going to happen," he said.

Can a president even do that?

Trump's involvement in the deal itself was unorthodox, but for a president to get involved in procurement details would be extremely unusual, according to experts we talked to. The process is strict and rule-bound, and while here are some regulations that relate to American production, they apply only to certain goods and probably couldn't be used to penalize individual companies.

"I'm not aware of any rule that a president could use without going through a formal rule-making process to put his finger on the scale in favor of companies that source in this country," said Robert Stumberg, a professor of law at Georgetown who has written about government purchasing and trade. "It's rule of law, and it would be an instant lawsuit."

Still, it may be possible for a president to use budget requests to benefit a particular company, for him to make policy decisions that could help certain contractors (like going to war) or to simply use soft pressure to encourage his underlings to avoid certain companies, said Neil Gordon, a contract accountability investigator at the Project on Government Oversight.

"Some companies depend more on the federal government so they can't afford to displease the administration, but it's not really a presidential level of activity," said Gordon. "These contracting decisions go on way down in the bureaucracy of each agency."

Greg LeRoy, the executive director at Good Jobs First, which promotes government accountability in economic development, said that the Carrier deal may be convenient for the campaign, but it's only a drop in the bucket when weighed against all the other jobs that are leaving. The jobs saved would account for less than 1 percent of the manufacturing jobs that have been lost in Indiana alone since 2000. It may cause some companies to think twice, but it probably won't cause a seismic shift in how companies measure their options.

"Could Trump literally start doing one-offs like this all over the place with any defense contractor? Would he have time to do anything else?" asked LeRoy. "It's kind of a crazy thought."