Commentary

Trump Takes On Boeing; Businesses Wonder Who's Next?

President-elect Donald Trump yesterday tweeted that “costs are out of control” at Boeing for a new Air Force One still in the planning stages and called for canceling the order. He followed up by telling reporters in the lobby of Trump Tower, “I think Boeing is doing a little bit of a number.” 

In a statement, Boeing responded that it is only under contract for $170 million “to help determine the capabilities of this complex military aircraft that serves the unique requirements of the President of the United States,” Curt Mills reports for US News.

“Previous presidents exerted a light touch with businesses, tackling industries as a whole while discussing policy in overarching tones,” writes Peter Schroeder for The Hill. “Trump, who built his name and brand in business, has shown a repeated interest in diving into specific brawls with particular companies, to the point that a company in his sights could see a tweet swing its stock price.”

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Boeing shares quickly dropped 1.4% in morning trading after the comment but recovered to finish up slightly, reports  MarketWatch’s Tomi Kilgore.

“In recent days, Mr. Trump has threatened to impose a 35% tariff on companies that move jobs overseas and then ship goods into the U.S. On Dec. 1, he announced that the Carrier unit of United Technologies Corp. would retain 800 jobs in the U.S. after he pressed the company not to move certain operations to Mexico. On Dec. 2, he chided valve maker Rexnord Corp. about its plans to move some operations to Mexico,” recall Doug Cameron and Damian Paletta for the Wall Street Journal.

After meeting with Trump on Tuesday, Japanese billionaire Masayoshi Son —  the founder and CEO of SoftBank — “said he will invest $50 billion in new startups in the United States, committing to creating 50,000 new jobs over an unspecified time period,” the Hong Kong Standard reports.

But Trump’s comments about Boeing topped the news cycle. 

“A new version of Air Force One won’t be available until at least 2023, late in Trump’s second term if he is re-elected. Until then, Trump will inherit the aircraft that now transports President Barack Obama, replacing the billionaire’s beloved, gold-trimmed Boeing 757 that flew him across the country during his campaign,” points out Bloomberg’s Margaret Talev.

“Air Force One, though, is no mere 747. The plane is ‘an airborne White House,’ said Mackenzie Eaglen, a defense fellow at the American Enterprise Institute. It is equipped with secure communications, classified defense systems and even an operating room, and is built to be refueled in mid-air and to survive a nuclear war. There is no easy replacement.”

In any event, Boeing has not been awarded a contract to build the plane “ though logically it is the only U.S. manufacturer with the capability to build such an aircraft,” reports the Washington Post’s Glenn Kessler in a story dissecting the “inaccuracies” in the Trump tweet. Another is that the eventual cost — for two planes, not one — is still up in the air.

“The Air Force hasn’t released a total dollar amount for the program yet. The program includes two aircraft and is still in the development stages. So far the Air Force has budgeted $2.7 billion for the program. But that’s for research, development and testing—not manufacturing,” writes Christian Davenport in another story for the Washington Post

The Air Force expects “this number to change as the program matures with the completion of risk reduction activities,” it said in a statement. But “the real cost could grow to $4 billion, according to an analysis by Todd Harrison, a defense analyst with the Center for Strategic and International Studies,” Davenport writes. 

Say — or tweet — what you will, the president-elect’s penchant for letting his feelings be known has even James Pethokoukis of the conservative American Enterprise Institute questioning the wisdom of doing so. “It’s still too early to establish “how much of this was just one-off behavior and how much of this is going to become the modus operandi of the new administration,” he tells the Financial Times’ Shawn Donnan. 

“However, if it does become how a Trump administration works with business it would mark a fundamental shift for a U.S. economy that has long thrived on the credo that the market decides and where businesses have been free of the sort of political pressure they might face in places such as China,” Donnan writes.

“This is a novel political experiment and maybe it’s worth running,” Pethokoukis said. “But I’d rather not run it with the largest economy in the world.”

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