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On Monday, President Trump issued an executive order to block Singapore-based Broadcom’s takeover of Qualcomm before the two companies had even made a deal. In the order, the president says that “there is credible evidence that leads me to believe that Broadcom Limited . . . might take action that threatens to impair the national security of the United States.†The move seems to have worked, given that Broadcom withdrew and terminated its $117 billion bid on Wednesday morning. What this evidence entails is highly unclear.Broadcom and Qualcomm are major players in the mobile-technology space. The two companies produce much of the silicon that powers laptops, phones, and tablets. Despite Broadcom’s Singapore corporate headquarters, it is largely an American company and started as a division of Hewlett-Packard in the 1960s. The company plans to move its headquarters to the U.S. next month, quite possibly as a result of corporate-tax reform. In fact, Broadcom’s CEO announced the move at the White House this past autumn, standing beside President Trump as he did so.This is the latest in a long line of trade restrictions that the administration has taken in the name of national security. Each has been fast-tracked unilaterally by means of Cold War–era statutes, including the recent steel and aluminum taxes. The Trump administration has been quietly blocking international business deals via a Treasury Department panel, the Committee on Foreign Investment in the United States (CFIUS), that is chaired by Steven Mnuchin. In the case of Broadcom, the president chose the much more visible route of issuing an executive order as well. Why did this call for such visibility? Trump will be in San Diego next week; it is entirely possible that he wants to claim “victory†at Qualcomm’s offices . . . . . . The Broadcom-Qualcomm merger would have been the largest in tech history. It was likely to run into antitrust issues, especially given that the two companies between them produce most smartphone components. The deal might have been stopped in its tracks by antitrust regulators, but in that case at least the reasons would have been transparent . . . Trump and the GOP talked up the ways in which corporate tax reform would open up the U.S. to greater investment, and they had a point. But if the flip side is that foreign investment is to be arbitrarily blocked, even when it amounts to hundreds of billions, what good do the tax changes do?
