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Trump Celebrates Wisconsin Foxconn Facility Amid Tariff Tensions

Jennifer Jacobs, John McCormick
U.S. President Donald Trump, left, speaks with Terry Gou, chairman of Foxconn Technology Group, after the groundbreaking ceremony for the Foxconn facility in Mount Pleasant, Wisconsin, U.S., on Thursday, June 28, 2018. After repeatedly bashing the leadership of an iconic American manufacturer this week, Trump was 30 miles away from its Wisconsin headquarters to praise a Taiwanese company for bringing jobs to a state critical to his re-election.

President Donald Trump planted a political flag in Wisconsin on Thursday, taking part in the groundbreaking ceremony for Foxconn Technology Group’s new facilities, a controversial deal that he’s embraced as a symbol of his “America First” trade policies.

The visit was an early illustration of Trump building the case that his economic policies -- particularly tax cuts and efforts to revive American manufacturing -- are paying off ahead of crucial November midterm elections that will determine control of Congress. Tariffs Trump has leveled in trade disputes with China and Europe are raising investor concerns about the economic outlook.

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Trump said the FoxConn project will create 15,000 jobs and contribute $3.4 billion annually to Wisconsin’s economy. He called the facility “the eighth wonder of the world” and added that it would be built entirely with American concrete and steel.

Trump appeared to inflate the best-case-scenario total for new jobs listed for the project by Wisconsin state officials and Foxconn, both of which have said the facility may eventually employ 13,000.

Just 30 miles away from the event, a different picture of Trump’s economic policies was taking shape. Harley Davidson, the iconic American motorcycle maker, drew the president’s ire for a decision to shift production outside the U.S. for machines made for European Union customers. The move resulted from tariffs enacted by the EU in response to Trump’s penalties on imported steel and aluminum, the company said.

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“Harley Davidson, please build those beautiful motorcycles in the USA, please,” Trump said. “Don’t get cute,” said the president, adding that “your customers won’t be happy if you don’t” build the motorcycles in the U.S.

Sharp rhetoric about Harley has put Wisconsin Governor Scott Walker, the owner of a 2003 Harley Road King motorcycle who has used the brand to promote his own political career, in an awkward position as he campaigns for re-election in November.

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Walker, who lost out to Trump in a bid for the 2016 Republican presidential nomination, has avoided directly criticizing the president for blasting one of his state’s top companies. Instead, he’s expressed support for free trade.

“The state pretty solidly is doubtful about tariffs,” said Charles Franklin, director of the Marquette Law School Poll.

In a survey of Wisconsin’s registered voters taken June 13-17, Franklin found just 29 percent think raising tariffs on steel and aluminum imports will help the U.S. economy. More than half -- 55 percent -- said it will hurt.

Trump has said Harley is using the tariffs as an excuse to move American jobs elsewhere, but a report Wednesday from S&P Global Ratings suggests otherwise. The ratings company said Harley’s corporate credit rating may be cut as the company faces risks from an emerging U.S.-EU trade war, raising the company’s costs and possibly leading to declining retail sales and shipments.

Phil Levy, an adjunct professor of strategy at the Kellogg School of Management at Northwestern University, said other companies are likely to follow Harley.

“A global business like Harley-Davidson must respond to changing market conditions if it is to stay competitive,” he said. “We are likely to see more such business moves as the administration expands its protectionist policies.”

Trade Dispute

Foxconn, which is China’s largest private employer, is sensitive to any escalation in the trade dispute between the world’s two biggest economies. Among other moves, Trump is backing legislation under consideration in Congress to strengthen the Committee on Foreign Investment in the U.S., or CFIUS, designed to give foreign investments in U.S. companies greater scrutiny to prevent intellectual property theft.

Trump on Thursday celebrated Foxconn as a win for his efforts to lure jobs to the U.S. But that doesn’t appear to be an easy sell to Wisconsin voters. The Marquette survey found they’re skeptical about the payback from the $3 billion the state has promised to provide in assistance.

Just 40 percent said they think Foxconn will ultimately provide as much economic payback as the state is investing in the project, while 46 percent said taxpayers are spending more than the plant is worth. A 56 percent majority do see the project substantially improving the Milwaukee area’s economy, even if they don’t expect much benefit in their own area.

2020 Plans

Public perception of the massive deal is certain to play a critical role in Trump’s 2020 re-election plans in Wisconsin, where he beat Democrat Hillary Clinton in 2016 by just 1 percentage point.

Walker, who personally lobbied Foxconn Chairman Terry Gou for the factory and stood by Trump’s side in the White House’s East Room when construction plans were announced 11 months ago, faces an even more urgent referendum because he’s on November’s ballot.

The state tax breaks and other incentives represent what Walker has called the largest economic development project in Wisconsin’s history. In exchange, the company has promised to create jobs with an average salary of nearly $54,000.

If both sides deliver fully, the economic package for Foxconn, which is best known for its role assembling Apple Inc.’s iPhones, would cost roughly $230,000 per job.

Showing some defensiveness about state assistance and other questions that have been raised about the project, Walker’s office has released a series of memos this week entitled “Foxconn Myth vs. Fact” that have also called the project the “largest corporate attraction project in U.S. history” as measured by jobs."

Neither Tom Evenson, Walker’s communication’s director, nor the governor’s press office responded to emails seeking comment.

Democrats are trying to boost skepticism about the deal, tie Walker to Trump, and link both men to job losses from Harley’s announced production shift. Eight Democrats are competing ahead of an Aug. 14 primary to win the right to challenge Walker.

“Walker is afraid to stand up to Donald Trump, but he also owns this mess as much as Trump does,” T.J. Helmstetter, a spokesman for the Democratic Party of Wisconsin, said in a statement.

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