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Home / World / CEOs angry at Trump rules, warn, they hurt business, investment

CEOs angry at Trump rules, warn, they hurt business, investment



DAVOS, Switzerland (Reuters) – President Donald Trump announced last week from Davos Mitte the stage from global CEOs that America is a great investment destination. It is not that unusual.

Ken Hu, Deputy Chairman of Huawai, attends the Annual Meeting of the World Economic Forum (WEF) on January 22, 2019 in Davos, Switzerland. REUTERS / Arnd Wiegmann

Foreign direct investment in the United States fell in 2018 and companies This year's World Economic Forum in the Swiss Alps fears that Trump's trade war with China will further dampen the global economy and business investment.

One major complaint this week: Companies increasingly dependent on consumers in China have had to lower their earnings prospects as the world's second-largest economy cools.

And while the US government has lowered taxes and regulations to attract new investment, many sectors in the United States are seething with caution.

"The trade war was very damaging to US agriculture," said David MacLennan, chief executive of US food and agriculture giant Cargill Inc., which announced poorer China results in early January.

"The longer this takes, the worse it is," he told Reuters.

Foreign investment in the United States, which includes cross-border mergers and acquisitions and in-house loans, declined by 18 percent year-on-year in 2018, according to the United Nations Conference on Trade and Development (UNCTAD).

This is almost equivalent to the worldwide decline in foreign investment by 19 percent. However, this is remarkable given the deregulation and tax cuts that would otherwise have led to foreign investment. In January last year, many executives in Davos stated that they wanted to spend money in the USA in 2018.

While the United Nations Commercial Agency attributed global and US taxes to US and Chinese tariffs, imports from other countries since mid-2018, foreign investment in China increased 3 percent year-on-year last year. Foreign investment to India increased by 7 percent.

Alan Jope, chief executive of consumer goods company Unilever ( ULVR.L ), said the United States is still a good market for its products, including Dove Deodorant, Magnum Ice Cream, and Lipton Tea ,

But it's China, where Unilever teamed up with e-commerce giant JD.com ( JD.O ) last year to move its products across the country. This has become the more resilient market.

Jope said China is "one of our most reliable sources of growth. China provides the new stability in the consumption of consumers. "

RIPPLE EFFECTS

The US-Chinese trade war has hit industry around the world in recent months.

Large Chinese companies such as Alibaba ( BABA.N ) have shrunk their investment plans in the US. Taiwan-based Foxconn ( 2354.TW ) has withdrawn its plans for a factory in Wisconsin, and Chinese automaker GAC Motor [GACHA.UL] has also delayed its entry into the US market.

In September, the Austrian fiber producer Lenzing stopped planned expansion in the US and blamed rising tariffs between the US and China.

Chinese textile exports to the US are among the goods subject to customs duties. Lenzing set up a $ 322 million project in Alabama to focus on building a new manufacturing facility in Thailand.

Foreign companies are still investing, especially in the automotive industry.

Volkswagen ( VOWG_p.DE ) said earlier this month that it will invest $ 800 million to build a new electric car at its Chattanooga, Tennessee plant. Toyota and Mazda are working on a new assembly plant and Daimler and BMW are investing in the existing plant.

But the economic malaise driven by the upward movement of trade is hitting tech companies, both due to the disruption of the supply chain and the economic slowdown in China.

Apple ( AAPL.O ) warned this month of disappointing quarterly sales, pointing to a slowdown in iPhone demand in China. Samsung Electronics Co Ltd ( 005930.KS ), the world's largest manufacturer of smartphones and chips manufacturers for other smartphone makers, including Apple and Huawei, announced that fourth-quarter earnings were likely up 29 percent fallen.

"In the long run … I am afraid that the trend will spread to many other countries and industries, and at that time … we will all be adversely affected," said Ken Hu, deputy chairman of China's Huawei Technologies [HWT.UL] said in Davos.

Huawei, the world's largest manufacturer of telecommunications equipment, suffers "probably the most at the moment" because it relies on highly integrated and globalized supply chains, Hu said.

TRUMP LOMS LARGE

Following the interruption, Trump's trade war with Chinese President Xi Jinping threatens Davos this year, even though neither is here.

The International Monetary Fund reduced its global growth forecasts on Monday, and a poll by accounting and accounting giant PwC of nearly 1,400 executives shows growing pessimism among business leaders.

The PwC study found that 27 percent of non-US executives consider the United States the # 1 growth potential, compared to 46 percent in 2018.

Not just the economy is clouding the economy sky Foreign Companies, especially Chinese, are also looking more closely at offering deals to the United States after the Trump administration last year strengthened the powers of the Foreign Investment Committee (CFIUS), said the former US ambassador to the European Union , Stuart Eizenstat Now he is the director of the law firm Covington & Burlington LLP.

CFIUS is an interinstitutional body that reviews acquisitions for national security purposes.

China's state-owned Sinochem group [SASADA.UL]which has had merger negotiations with ChemChina to found the world's largest industrial chemicals company, said it does not believe it could complete a US acquisition in the current environment.

"You know what's going on today, and I think you'll see that less investment will go overseas," said Sinochem chairman Ning Gaoning.

"The Chinese are getting quite confused. They thought they were welcome to invest in other countries. Now they realize that they are not always welcome. "

FILE PHOTO: US President Donald Trump announces agreement between the United States, Mexico and Canada (USMCA) as US Secretary of Commerce Wilbur Ross attends a rose press conference at the White House Garden in Washington, USA October 1, 2018. REUTERS / Leah Millis / File Photo

Takeshi Niinami, chief executive of Japanese brewer Suntory Holdings Ltd. [SUNTH.UL] told Reuters in an interview that the world is "very big emotional leader," including one in Washington

"Davos is a body working on a voice to give (a message that says)," Come on, we have to be rational, "he said. "The business should be the one to let it cool down."

(This story was postponed to correct "headlines" in the headline.)

Report by Soyoung Kim and Jessica DiNapoli in Davos, Switzerland, Additional coverage by Leika Kihara, Tom Miles in Geneva. Editing by Alessandra Galloni and Mark Trevelyan

Our Standards: The Thomson Reuters Trust Principles.

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