Trump the Hypocrite: Investing Overseas Fine for Him

[Oceander]

The article itself is from back in August, but it bears posting because it emphasizes just one of the many things that is so wrong with Trump as a republican candidate.

Trump the Hypocrite:  Investing Overseas Fine for Him

Donald Trump’s appeal is said to be his straight talk. But when it comes to international trade, he sounds like a hypocrite, the classic “Do what I say, not what I do” politician.

While bashing companies for investing in foreign countries, Donald Trump’s own company has shown no inclination to invest and build only in America. In fact, a significant percentage of his company’s hotels and major real estate properties are located abroad.

“Mr. Trump is either inexcusably hypocritical or inexcusably ignorant of economics,” according to Donald J. Boudreaux, a professor of economics at George Mason University. “There is zero economic difference between, say, a U.S. car company’s investments abroad in factories and Mr. Trump’s own investments abroad in hotels: both are meant to improve the bottom line of companies headquartered in the U.S. by taking advantage of profitable economic opportunities outside of the U.S.”

Yet a staple of Trump the candidate’s speeches has been to bash Ford Motor for building a plant in Mexico. “Trump has repeatedly said that if elected, he would not allow Ford to open a new plant in Mexico,” reported the Detroit News. “At his campaign announcement speech in New York in June, Trump said he would call [Ford CEO Mark] Fields to explain the ‘bad news.’”

“Let me give you the bad news: Every car, every truck and every part manufactured in this plant that comes across the border, we’re going to charge you a 35% tax,” Trump said. “They are going to take away thousands of jobs.”

The Detroit News noted, “It isn’t clear how Trump could legally single out one automaker for punitive taxes.”

Ford spokesman Karl Henkel said: “Mark [Fields] sent Mr. Trump an email with information about Ford, including the $6.2 billion we have invested in our U.S. plants since 2011 and our hiring of nearly 25,000 U.S. employees.”

“When it comes to political hypocrisy, Donald Trump deserves a gold medal,” said Mark J. Perry, a professor of economics and finance at the University of Michigan-Flint and creator of the economics blog Carpe Diem. “At the same time that the billionaire businessman criticizes Ford for producing some of its cars in Mexico, and threatens to stop any expansion there and impose a 35% tax on Ford imports from Mexico, he certainly has no trouble taking advantage of the global marketplace when it comes to his own businesses.”

Perry notes Trump has imported clothing from China and Mexico produced for his brand. “For Trump to operate, outsource and invest globally while criticizing companies like Ford for doing the same is the ultimate hypocrisy. To be fair to Ford, Trump should either agree to impose a 35% tax on Trump Collection clothing and agree to stop investing overseas, or he should stop his threats against Ford for operating as a global carmaker.”

As economists such as Don Boudreaux and Mark Perry point out, there is no real difference between a U.S. car company investing in a foreign country and a real estate company building a hotel or office building in a foreign country.

Under “Our Hotels” on the Trump Hotel Collection website, it lists six domestic hotels and six international hotels. Is the problem Ford is building something in Latin America? Well, there are Trump hotels in Panama and Rio de Janeiro. The other hotels abroad are in Toronto, Doonbeg, Ireland, Vancouver, and Baku, Azerbaijan. (Toronto and Vancouver also have a Trump Tower.)

On the website for the Trump Real Estate Collection, nine international properties are listed, including two Trump Towers in India and one in Istanbul, another in Uruguay and another in the Philippines, as well as a Trump World in South Korea, among others.

If one argued the way Donald Trump argues on the campaign trail, then one could say that Donald Trump is costing America jobs by building hotels and commercial real estate in foreign countries instead of in the United States. In theory, the same money used to build and staff more than a dozen properties abroad could have supported thousands of jobs in America.

Donald Trump and his executive team believed a better use of the company’s capital was to invest its money abroad rather in the United States and that those investments in foreign countries would be more profitable.

There is nothing wrong with the company Donald Trump leads investing in other countries. However, there is something wrong when he attacks the head of another company for doing the same.

Question:  how is imposing a punitive tax on a business just because it sells in the US products that it assembles outside the US any different from imposing a punitive tax on an individual because he or she doesn't buy government-approved health insurance? 

[libertybele]

Trump is investing in other parts of the world, that is a given.  However, keep in mind, he is "doing business" within the 'guidelines' of the current U.S. tax codes for corporations.  The U.S. has some of the highest corporate tax rates in the world.

In Trump's "tax plan" he wants to reduce the corporate tax rate to zero.  Trump has  argued that lowering the tax rate on capital gains and dividends is critical for investment. Trump believes eliminating corporate taxes will create more jobs. Trump is opposed to TPP saying that it will cost American workers jobs. Trump is for free AND fair trade.

[Oceander]

Trump is investing in other parts of the world, that is a given.  However, keep in mind, he is "doing business" within the 'guidelines' of the current U.S. tax codes for corporations.  The U.S. has some of the highest corporate tax rates in the world.

In Trump's "tax plan" he wants to reduce the corporate tax rate to zero.  Trump has  argued that lowering the tax rate on capital gains and dividends is critical for investment. Trump believes eliminating corporate taxes will create more jobs. Trump is opposed to TPP saying that it will cost American workers jobs. Trump is for free AND fair trade.

Two points:

first, the article wasn't about whether Trump should invest overseas or not; it was about the utter hypocrisy of knocking one person for doing precisely what you yourself are doing.

second, Trump has no intention of actually getting rid of, or even lowering, the corporate tax rate if he's going to reimpose it as punishment for not investing the way he thinks other companies should invest.  In fact, that's precisely the sort of thing a democrat would do - and that they have tried to do repeatedly.


Trump isn't a free marketer, he's a revanchist protectionist.  Another sin he seems to have acquired from a too-close association with liberals.

[Formerly Once-Ler]

Trump isn't a free marketer, he's a revanchist protectionist.  Another sin he seems to have acquired from a too-close association with liberals.

revanchist - I had to look that up.  Thank you.  I learned a new word today.  Awesome.

[libertybele]

Two points:

first, the article wasn't about whether Trump should invest overseas or not; it was about the utter hypocrisy of knocking one person for doing precisely what you yourself are doing.

second, Trump has no intention of actually getting rid of, or even lowering, the corporate tax rate if he's going to reimpose it as punishment for not investing the way he thinks other companies should invest.  In fact, that's precisely the sort of thing a democrat would do - and that they have tried to do repeatedly.


Trump isn't a free marketer, he's a revanchist protectionist.  Another sin he seems to have acquired from a too-close association with liberals.

I understand the premise of the article and the issue of hypocrisy that is pointed out about Trump.  All I am saying is lowering the corporate tax rate as he has proposed WILL bring jobs back period.  That not only jump starts our economy but is a win for him personally as well.  IF we have a zero corporate tax rate, why wouldn't corporations want to bring businesses back to the U.S.?  With a zero tax rate, why wouldn't other countries want to bring business into the U.S.? I'm not quite clear as to what or how the punitive tax would be structured, but clearly a zero tax rate would be quite a tax incentive.  I don't see Trump as a protectionist.  There also is a huge difference between free trade and fair trade...Trump believes in both.

[Oceander]

I understand the premise of the article and the issue of hypocrisy that is pointed out about Trump.  All I am saying is lowering the corporate tax rate as he has proposed WILL bring jobs back period.  That not only jump starts our economy but is a win for him personally as well.  IF we have a zero corporate tax rate, why wouldn't corporations want to bring businesses back to the U.S.?  With a zero tax rate, why wouldn't other countries want to bring business into the U.S.? I'm not quite clear as to what or how the punitive tax would be structured, but clearly a zero tax rate would be quite a tax incentive.  I don't see Trump as a protectionist.  There also is a huge difference between free trade and fair trade...Trump believes in both.

There are any number of reasons why a business might not wish to relocate operations to the US even with a zero corporate rate.  First, and most important, the wage differential means that it may still be easier/cheaper to produce overseas.  But that's just the sort of free-market based economic rationalism we should want to see companies employing; we shouldn't be encouraging beggar-thy-neighbor protectionism.