GE CEO: 'President Trump is right' on trade
During an event at Georgetown University on Thursday, CEO of General Electric Jeff Immelt shared his thoughts on the shortcomings of globalism, why protectionism is not the solution, and what US companies need from the Trump administration.
Here are some of the highlights:
- On the end of globalization: "Today, people question globalization. The U.S. is challenging trade deals and has effectively shut down its export bank. The U.S. is not alone. Protectionist barriers are rising in Europe and Asia as well."
- What changed: "How did an ideal so connected to American influence and success become so demonized? In retrospect, there were key changes along the way."
- China has changed the game: "They played to win and rose quickly. Over the last 25 years, China has been a force that the rest of the world reacted to. Other governments made it their mission to create jobs and capture wealth at home as part of a zero-sum game."
- Globalists became too elite: "We made globalization its own political party. The 'party' saw globalization as a theory, rather than understanding the impact on normal people, or the critical investments needed to build competitiveness."
- Trade deals weren't explained to the public properly: "Our government failed to convince people of the important role that trade plays in building US strength around the world. TPP, after all, was even more important geopolitically than it was economically."
- On the Trump administration's trade stance: "In this regard, President Trump is right. We don't have the same opportunity to sell our products globally that is enjoyed by those selling in the US or our global competitors. Trade can be made more fair, and American workers would benefit."
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- Going forward, let's compete: "Is protectionism the answer? I guarantee you ... we have the most to lose through protectionism," said Immelt. "For companies, we should aspire to have the same market share globally that we do in the U.S.; globalization should be more about growth than cheap wages."
- Companies need to invest locally, tax reform is needed: "Our current policy favors foreign companies operating in the US over American companies operating abroad; and favors American companies who import goods manufactured outside the US over companies that manufacture in the U.S. and export. In a country that wants to grow manufacturing jobs and exports, our tax system does the opposite."
- The US must continue to shape the terms of trade: "Rather than withdrawing from trade deals, we should work to modernize and improve them. NAFTA presents an opportunity for the U.S. government to do just that. We have an opportunity to create an integrated North American energy bloc which could drive down costs and incentivize US manufacturing. And, with the right reforms, Mexico should be a huge market for American products."
Immelt did offer up some humility in the midst of his take on global economics by saying, "I don't consider myself to be a global philosopher. Rather, I view my role as preparing GE to compete for world markets; to do so with confidence."
Speaking on his own company, Immelt added, "Our role – as a company – is to grow profitably for investors, support our employees and customers and represent our country well. We believe that the will to compete is the purest American value."
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