Corporate solidarity against President Donald Trump's immigration and travel policies has grabbed the headlines this week. But while that opposition from the biggest CEOs from Silicon Valley to Detroit is getting most, if not all, of the attention, you may have missed the fact that an equally potent coalition of big time corporations is standing in strong support of a key component of President Trump's "America First" strategy. And it could backfire on them badly.
It's called the "American Made Coalition" and it's led by GE, Boeing, Oracle, Pfizer, Dow Chemical and others. And all of them are heavily in favor of the border adjustment tax (BAT) plan that President Trump and Congressional Republicans are working on right now. The plan would cut corporate income tax to 20 percent from 35 percent, exclude export revenue from taxable income and impose the 20 percent tax on imports. In other words, it promises to protect U.S. made goods and American manufacturers from what the White House and the GOP call unfair competition.
American Made Coalition spokesman John Gentzel parroted that message Thursday by saying: "American workers and businesses are not competing today on a level playing field with foreign competitors because of an outdated and unfair tax system."
That not only sounds like what we hear from Congressional Republicans, but it's eerily similar to the points President Trump repeatedly made on the campaign trail as well. Suddenly, all those political and economic experts who said the protectionist aspects of the Trump platform was poison to large corporations might have to eat crow.
The question is: are these big companies really acting wisely? Perhaps it makes sense to try to make a friend out of the new power base in Washington. But when the nation's biggest exporters jump excitedly in favor of a tax that would give them an edge over their foreign competitors, shouldn't they be worried about retaliation? A border tax of any kind is not likely to go unanswered and that will cost those exporters for sure.
Yes, there is history of Republicans like President Ronald Reagan imposing tariffs to protect U.S. manufacturers like the semiconductor industry and Harley Davidson. President Trump even cited that history Thursday when he met with Harley's current management at the White House.
But here's the thing, Reagan's protection of Harley Davidson was just for that company and it was temporary. He also never targeted all foreign-made computer chips. And that protection against Japan was also temporary. The Trump and Republican plans look like they'd ensnare all imports and last indefinitely. That smacks of bad trade policy like the infamous Smoot-Hawley tariff that the same President Reagan often blamed for causing the Great Depression. Politicians who claim the Reagan mantle to justify this new proposed policy should be a little more careful with the facts.