View from Washington: Perhaps technology can find some upside to the Trump presidency
In a quiet week - comparatively - for technology, President Trump shifted emphasis back to the fiscal 'carrots' Washington is offering Silicon Valley.
It has been a comparatively quiet ‘Week in Trump’, for the technology industry at any rate. The new executive order on immigration has been postponed – though not necessarily for that long – and the main contention between Silicon Valley and the President concerned the decision to roll back the rights of transgender students. Yahoo, Intel, Google, Apple and Microsoft all issued statements opposing the move.
Meanwhile, some unusual ‘ironies’ emerged, foremost among those being that Facebook made a $120,000 cash and in-kind donation to the Trump-supporting Conservative Political Action Conference (CPAC) that took place this week in Washington DC. And all that just as Facebook CEO Mark Zuckerberg had been worrying over the influence of ‘fake news’ and ‘filter bubbles’ in a lengthy forward-looking essay.
Nevertheless, it is hard to paint even that as a real controversy. Most large US companies spread some largesse across events and candidates in both main political parties, even when there are obvious and persistent tensions.
It is time then, perhaps, to note that while technology and Trump are at loggerheads on some very important issues, and particularly immigration, their broader relationship is not solely one of stick. There is also a fair bunch of carrot.
The most timely reminder of that came as President Trump organised another of his CEO roundtable events, this time inviting representatives from US manufacturing to the White House last Thursday (23 February). Engineering was well represented by companies such as Lockheed Martin, Dell Technologies, 3M, Ford and General Dynamics.
Manufacturing was a signature issue for Trump on the campaign trail, and during the summit he was at pains to acknowledge that it will remain such now that he is in office. However, those expecting the meeting to spark a more detailed policy briefing went away disappointed.
Rather, Trump’s observations remained at the higher level: “My administration's policies and regulatory reform, tax reform, trade policies will return significant manufacturing jobs to our country,” he told the meeting. “Everything is going to be based on bringing our jobs back, the good jobs, the real jobs. They’ve left, and they’re coming back. They have to come back.”
However, the White House did have more to say on the fiscal side. Treasury secretary Steven Mnuchin, who had his own side meeting with the manufacturing executives, confirmed that the administration plans to begin its tax reform programme with a series of measures aimed at receiving sign-off from Congress before its August recess.
Many of these will be based around what Mnuchin called “simplification for business”. It’s a phrase that, particularly coming from a senior finance minister, could cover a multitude of things, but industry will be looking for Trump to follow through on promises both to cut the US Corporation Tax rate and make it less costly for multinationals to repatriate profits from overseas.
However, it does seem that the President has drawn the line at instituting a reform sought by several branches of the manufacturing and high-technology sector, a border-adjusted corporation tax. This would impose extra taxes on imports but not on exports.
It has – for obvious reasons – generated strong opposition among US retailers, particularly net importers ranging from megabox retailer Wal-Mart to America’s largest consumer electronics chain Best Buy. Trump, for his part, has formally deemed the idea ‘too complicated’ to implement in the short term.
Still, it’s not all doom and gloom fiscally, and a more concrete timetable as to what Silicon Valley would like to see has begun to emerge.
The only dampening notes came when Mnuchin noted that the benefits of the tax cuts to the economy may take longer to emerge than some on Wall Street believe, and as Goldman Sachs said it also thinks some investors have gotten ahead of themselves.
The so-called ‘Trump Bump’ has seen the S&P500 stock index rise by almost 10 per cent since the election, as investors factored in the benefits of both tax cuts and likely rollbacks in regulation. However, a growing number of analysts are coming out alongside Goldman in expecting a fair-sized retreat from today’s levels before the end of the year.
So much does come down to the Trump administration rolling out detailed policy rather than, as is currently the case, a series of point measures in the form of Executive Orders.
Blimey, traditionally-styled governance in DC. Whoda thunk it?