Donald Trump appeared on Monday with Jack Ma, the founder of Alibaba. The President-elect announced plans to create about a million new jobs for Americans in cooperation with Chinese corporation.
Men met in the Trump Tower. In the interview Trump said they plan to focus on the small business. He also highlighted Ma likes both countries.
“I do, China, and I love America,” Ma said, in total agreement.
President-elect refused to discuss irrelevant topics, like Russian hacker attacks, during the meeting. Trump proposed reporters to focus on the jobs’ issue that was on the agenda.
According to the media, Alibaba plans to create 1 million jobs in the US over the next five years. The platform also will sell different American goods, like fruits and wine.
The meeting of the US President-elect and the Chinese businessman also had a more global purpose – to discuss improvement opportunities for countries’ relations.
Donald Trump proposed punishments for unfair trading practices
The cooperation with China isn’t the only strategy that Trump plans to use to give Americans more jobs. In his other propositions President-elect tends to his familiar aggressive policies. His simple plan focuses on tariffs as a punishment for foreign governments who adopt unfair trading practices like currency manipulation, and to force US firms to import less.
Trump refers to the Constitution to support his idea. He highlighted the document mentioned only tariffs for foreign importers and didn’t say anything about the income tax.
“[And now] we have turned things completely upside-down. We tax and regulate and restrict our companies to death, then we allow foreign countries that cheat to export their goods to us tax-free.”
While it is the main American law “on Trump’s side”, experts mention the situation is too complex to think about punishing with tariffs without negative consequences for the local business. According to statistics, most big importers also are responsible for the huge part of export. In fact, it turns out 53% of biggest importers are also the biggest exporters. And around 35% of the biggest exporters also import many goods. So it’s really difficult to create government measures to rein in import without consequences for the export.
Economists suggest this is because of how trade affects businesses. Only the most competitive firms can be exporters, because foreign buyers aren’t going to look abroad for goods that are lower quality or more expensive than they can get at home. And one way firms become competitive is by building a global supply chain that brings them raw materials or components at a low cost that are then finished in the US.
All together, what these data show is that attempts to drive up exports by punishing imports may not be the smartest way to give US companies an advantage on the world market, at least in the near-term.