Hello reader. If there is a thing that US President Donald Trump is still obsessed with the size of the crowds at his rallies, it is the extent of investment promises that he has secured from companies and countries.
The White House maintains a ongoing list of the President’s second -term offers on A Website with the title “Trump effect”. The commander -in -chief recently claimed that the obligations had already exceeded $ 10, which allegedly demonstrated that his plans to exploit a tariff -oriented production boom in America. This week I test his claims.
The list of the White House is undoubtedly impressive. However, the 10 -dollar number of Trump quoted at the beginning of the last month is misleading.
For the beginning, mid-May, Goldman Sachs estimated that companies had announced plans to invest over 2 participants over several years in several years, with foreign governments over $ 4 TN. This comes to an still chunky number of at least $ 6 – around 20 percent of the US economy. (Further obligations have also been received since Goldman’s analysis.)
The cumulative value of announcements of the entire foreign investment announcements by Greenfield direct investment, which records the capital intended for new facilities and operations, is also far ahead of where, according to the FDI markets, an FT-in-owner database, in the same point in the first term of trump and the administration of Joe.
But how much of all of this will actually happen?
First of all, commitments are of course not the same as realized investments. It is typical of companies and countries to announce projects in the term of office of a president to the curry favor with their administration.
With a view to the promises made during Trump’s first term, Goldman Sachs estimates that 80 percent of the investment obligations actually came about. Although solid, this included some top -class projects that no longer drop their goals. Alibaba scrapped a plan presented in January 2017, which was to create 1 million jobs. Foxconn has lowered a manufacturing investment plan in Wisconsin from USD 10 billion to only USD 672 million.
The incentive to beautify investment plans is even stronger in the second term of Trump in view of his broad tariff threats. “The partners of the US partners have a record that is due to the 1980s of trade voltages and US concerns by committing direct investments,” notes Matt Gertken, chief strategist at BCA Research. “After checking the most important objects on the list of the White House, we find that many of them are actually hyperbolic and for political effect.”
This is supported by data from FDI markets. The group also pursues that a foreign company could consider investing, e.g. B. a new investment strategy. It finds that signals in which the United States has increased as a share of all global signals from companies has increased at the highest time for well over a decade.
This indicates that a conversion rate of 80 percent is highly unlikely.
According to the analysis of the Cato Institute, the balance of the White House is also wrong. “The list previously includes planned projects that are already underway,” says Scott Lincicome, Vice President of the Thinking Factory. “Other objects have a classic scope such as ambiguous time frames or are due to the economic environment.”
Some of the larger obligations are indeed strange. Apple has promised to invest $ 500 billion in the USA over the next four years. Nevertheless, there were only $ 10 billion for investment expenses and USD 31.4 billion for research and development global Goldman Sachs notes last year. The 500 billion USD engagement by Nvidia is similarly doubtful.
For companies, the gap between promised and current investments can conclude that the figures for headline grabbing could be strengthened by partnerships, acquisitions or production costs. With regard to promises from countries, both Saudi Arabia and Qatar’s “offers” do not include the purchase of US goods that promote American exports.
This raises a broader point: large investment numbers do not necessarily lead to GDP or workplace gains.
Significantly, the investment announcements at the company level have not made any significant improvements to the investment expenditure expectations. Almost 70 percent of Goldman Sachs’ stock analysts that cover companies with recent investments say that the commitments with previous plans usually overlap.
“The consensus forecasts for investments and economic growth have not changed in response to these announcements,” says Mark Zandi, chief economist at Moody’s Analytics. “If at all, the basic drivers of investments have weakened significantly due to the global trade war.”
Whether you are really new investments or not, many projects are likely to be cuped due to uncertainty. In fact, the BCA Research indicator is located in a recession investment in the USA.
The American building expenditure boom, which is associated with the law to reduce inflation and the act chips and science act, reaches its peak. Trump’s well-known dislike against the initiatives between Biden era Uncertainty To the status of your tax credits and subsidies. The investments under both programs were rejuvenated when the elections in 2024 came in a close perspective.
In particular, the lack of clarity over tariffs reduces the likelihood that they successfully deduct all fresh blueprints. The import numbers are subject to the negotiations of the White House with the American trading partners and now also the dishes.
The relocation of manufacturing production contains material fixed costs, often with multiple of the average gross operating surplus. Rational session halls do not risk any years of winning by carrying out new facilities when the tariffs shift again and make the investments less competitive. According to Goldman’s analysis, the US production costs are significantly higher in many industries than the three best countries that are currently exporting to the USA.
Both the sector and the nationwide tax plans from Trump are important here. For example, automobile manufacturers that consider whether the collective bargaining wall should jump in the eye on their entries such as steel and copper must keep an eye on.
Beyond tariffs, there are other restrictive factors. According to a recently global bank of America Global Research, over two thirds of the manufacturing companies that consider to produce more goods in the USA, cite the availability of qualified work Opinion poll.
The broader attack by the administration on universities and research risks that undermine access to highly qualified workers, while a clamp on undocumented migrants would reach construction workers. Approval processes are also notoriously slow.
And then there is § 899, a provision in Trumps a great law that would give the finance minister the authority to set retribution taxes on incoming foreign investments. The Tax foundation It is estimated that over 80 percent of the current US FDI shares from nations come from nations that are covered by legislation.
Overall, the obstacles to the completion of the proposed factory construction, product launch or a scene of the attitude during the second term of trump are not played. And even if projects occur, you may not deliver the desired results.
Maurice Obstfeld, Senior Fellow at the Peterson Institute for International Economics, examined the 2 billion USD promise from Consumer Goods Company Kimberly-Clark last month. “While Kimberly-Clark certainly wants to expand its American manufacturing capacity, the announced new facilities seem to be highly automated and will not use highly qualified workers not the Hene-Anorn jobs, which Trump was promising.”
Since the production costs and the availability of workers are important concerns, it is unlikely that the US change will promote considerable employment. “The companies that end should compensate for the associated costs through increased automation,” added the Global Bofa research.
Trump is not only in overtging investment commitments. Most presidents do it. The Bidea The White House has advertised over $ 1 $ in private sector obligations, although many projects were delayed or paused.
The discrepancy between the ongoing list of the announcements of the current administration and what is actually happening is probably one of the most exaggerated, in view of Trump’s transactional and moody policy.
Netto -totaling investments could even look bad until the end of Trump’s second term if things go on as it started. Domestic investment expenditure projects are currently largely in the queue or canceled. Outbound FDI projects can even record because companies try to avoid retaliation in the United States. Auto manufacturers are considering moving to China Rare earth magnets.
Over time, there is reason to be optimistic. For some companies and nations, the announcement of plans to invest in the United States is a long -term strategic game to achieve their unrivaled market and their unrivaled technology (even if the conditions are currently not entirely). “At the request, some promises indicate the promise of a future upward trend to ward off the reality of short-term threats,” says Clayton Allen, US director of the Eurasien Group. If politics stabilizes, this can catalyze resting projects.
At the moment, however, Trump’s investment transactions are largely a fraud.
Send your refutation and thoughts to freelunch@ft.com or on x @Tapperikh90.
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Free lunch on Sunday is edited by Harvey Nriapia
