Two Maryland companies were part of a breakfast meeting with President Donald Trump Monday morning, where the president said he would impose a “substantial border tax” on companies that move manufacturing oversees. Trump also promised tax breaks to companies that kept manufacturing in the United States.
“I welcomed the opportunity to meet today with President Trump and industry leaders to discuss ways we can grow manufacturing jobs in the United States. I was encouraged by the President’s commitment to reduce barriers to job creation, including targeted regulatory reform and long term budget planning,” Hewson said in a statement.
Plank was not available to comment on the meeting, which started off the first full working day for Trump after taking office on Friday. Trump made greater economic opportunity a central message in his campaign. At the breakfast meeting, Trump said he would cut taxes to rev up economic growth.
“We are going to be cutting taxes massively for both the middle class and for companies, and that’s massive,” Trump said at the meeting.
He suggested that a rollback of business regulations would be a particular focus of his economic plan, saying his observation has been that “regulation wins” over tax cuts as the more important factor in promoting growth. He also reiterated a campaign promise to cut regulations by 75 percent.
Roger Kashlak, professor of international business at Loyola’s Sellinger School of Business, finds Trump’s use of the term “border tax” to be paradoxical to his desire to cut corporate taxes. What Trump calls a “border tax,” is merely synonymous with a tariff, Kashlak said.
“A tax is a tariff, and a tariff is a tax,” he said. “If you impose a tariff you put a tax on goods entering a border, which leads to higher prices.”
That said, Trump’s message to bring manufacturing jobs back to America is one that is often heard during political campaigns, but rarely do politicians see it through, said Kashlak.
“They need to play it out,” he said, referring to Trump’s plan. He added that there is a compelling social argument to keeping manufacturing jobs in the U.S. but that it prompts larger economic questions.
For companies such as Under Armour and Lockheed Martin, manufacturing in the U.S. at a large scale will lead to higher labor costs that will likely fall on the consumer.
“There will be some efficiencies, but our labor costs will never be as low as labor costs in southeast Asia,” said Kashlak.
Furthermore, if the U.S. is looking to manufacture goods domestically and ship them overseas, a strong U.S. dollar will make it difficult to export.
“My gut feeling is that other countries will take our place in the low-cost areas and short-serve the emerging markets more efficiently than we can,” Kashlak said.
Baltimore-based Under Armour has been taking steps over the past year to encourage local manufacturing. Last summer, the sports brand opened UA Lighthouse in South Baltimore, a facility dedicated to creating ways to efficiently make shirts and shoes in a way that can be replicated with local manufacturers wherever Under Armour products are sold.
Still, the overwhelming majority of Under Armour’s sports apparel and footwear is manufactured overseas, as is the case for Nike and its over U.S.-based competitors.
Sagamore Development Co., which is backed by Plank, recently graduated its first class of west Baltimore residents from the developer’s Manufacturing Bootcamp. The program is led by The Foundery and the Center for Urban Families. Designed to show the Sagamore’s commitment to local hiring, the program trains participants in a range of skills to help them secure advanced manufacturing jobs. The next boot camp class is expected to be double in size.
Lockheed Martin was the target of a tweet from Trump in December regarding the company’s F-35 fighter jet, which is the Pentagon’s most expensive weapons system. The $379 billion F-35 is meant to be flown by the Air Force, Navy and Marines
“The F-35 program and cost is out of control,” Trump tweeted. “Billions of dollars can and will be saved on military (and other) purchases after January 20th,” referring to inauguration day.
Monday’s gathering of corporate executives was led by Dow Chemical Co. CEO Andrew Liveris, and also included Michael Dell, chairman and CEO of Dell Inc.; Jeff Fettig, chairman and CEO of Whirlpool Corp.; Mark Fields, president and CEO of Ford Motor Co.; Alex Gorsky, chairman and CEO of Johnson & Johnson; Klaus Kleinfeld, chairman and CEO of Arconic Inc.; Mario Longhi, president and CEO of United States Steel Corp.; Elon Musk, chairman and CEO of Tesla Motors Inc.; Mark Sutton, chairman and CEO of International Paper Co.; and Wendell Weeks, chairman and CEO of Corning Inc.
Business reporter Anamika Roy and Bloomberg News contributed to this report.