Corporate America Isn’t So Sure

Trump’s signature policies of mass deportation and high tariffs are now facing some corporate headwinds.

Image courtesy of Common Dreams

We’re used to hearing opposition from civil rights groups and Democratic leaders to two of Trump’s signature promises: mass deportations and high import tariffs. But lately his plans are experiencing pushback from voices that the Trump White House might be more keen to listen to.

On the subject of mass deportations, as NPR reported, the booming Texas construction industry is having serious misgivings about the plan because it relies so heavily on undocumented labor. 

And on tariffs, giant retailers like Walmart and Lowe’s have now made their misgivings public, warning that import tariffs could lead to higher consumer prices. That’s an economic no-brainer, but the fact that big corporations are now actually saying so is noteworthy.

In today’s piece, I’ll discuss how the Texas construction industry pushback poses some real world issues for Trump’s mass deportation plans. Then I’ll explore what the Walmart and Lowe’s statements mean in the larger context of the push for tariffs, including some theories about what Trump is really up to with his tariffs gambit.

No one left to build things

Texas relies heavily on undocumented labor, especially in the construction sector. According to a report by the American Immigration Council and Texans for Economic Growth, around 60 percent of the immigrant workforce in the state is undocumented. That’s a quarter of a million workers. Deporting them would devastate the industry and drive up housing prices in the state.

Marek, a big Houston-based residential and commercial construction company, warned NPR of the consequences. “It would devastate our industry, we wouldn’t finish our highways, we wouldn’t finish our schools,” said Stan Marek, its CEO. “Housing would disappear. I think they’d lose half their labor.”

Other industry experts concurred. “It's not remotely practical to round up and deport everybody,” said economist Ray Perryman, the president and CEO of the Waco-based Perryman Group. 

The Texas workforce simply isn’t large enough to keep pace with the state’s growth, noted Perryman. A massive roundup could substantially impact the Texas economy. “And, we simply don’t have an economic structure that can sustain that. There are more undocumented people working in Texas right now than there are unemployed people in Texas,” Perryman said.

The industry is still trying to put a positive spin on things, though. Perhaps, Perryman suggests, Trump could scale back his plans. “It’s easy to have a soundbite that you can say at a rally or put on a bumper sticker. But to translate that to policy is difficult. And you normally see presidents move in the direction of what they campaigned about but not all the way. And I think that’s what you’ll see here,” he said, perhaps too optimistically.

Marek even suggested Trump's threat to deport could finally lead Congress to enact immigration reform, something it hasn’t done in decades.

What these experts fail to consider is that there will be big corporate interests aligned on the other side of the fight, including prison construction companies that have much to gain if billions are spent on detention centers. Those companies will be pushing hard on Trump’s anti-migrant advisors, including Stephen Miller and Tom Homan, the former head of ICE, to make good on Trump’s pledge, or at least take things as far as they can as quickly as they can.

Caught in the middle will be millions of workers and their families who may need to go underground or move to a friendlier state to find work. In this sense, Texas may experience what Florida faced when it promised to crack down on undocumented migrant labor: construction projects abandoned for lack of workers and far higher costs to bring in documented replacements.

Tariff turf wars

Trump’s plans for high tariffs—a 10 to 20 percent tariff on all imports, including levies as high as 60 to 100 percent for goods from China—also hit resistance as retailing giant Walmart warned that the import taxes could result in increased costs to customers. 

As reported by CNBC:

Walmart’s CFO, John David Rainey, said the retailer could have to raise prices on some items if President-elect Donald Trump’s proposed tariffs take effect.

“We never want to raise prices,” he said in an interview with CNBC on Tuesday. “Our model is everyday low prices. But there probably will be cases where prices will go up for consumers.”

Rainey added that it’s too soon to say which products could cost more due to the tariffs.

Home improvement retailer Lowe’s similarly warned about the effect of tariffs on supplier costs which would get passed along to consumers. Its CFO said about 40 percent of the company’s costs come from outside of the U.S., including direct imports, and that “certainly would add product costs” even if the timing of that was uncertain. Lowe’s CEO confirmed the company is speaking with suppliers about the “what ifs of tariffs” as Trump’s tariff proposals take shape. 

On the Sunday talk shows, opposition to Trump’s tariffs came from others on the right. Sen. Rand Paul (R-KY), whom I am no fan of, spoke out openly against them, saying, “I don't like tariffs, but then again I don't like the president promoting tariffs. I think tariffs are a tax on the consumer.”

The anxiety of tariffs could be why Wall Street openly cheered Trump’s naming of hedge fund manager Scott Bessent as Treasury Secretary. It was a sign that, when it came to corporate America and Washington, it was going to be business as usual. Bessent will be focused on keeping interest rates low, which is hard to do when tariffs are spiking inflation. To this end, Bessent has said he believes tariffs should be “layered in gradually” to spread out their impact on prices. He also has described Trump’s tariffs as a negotiating strategy to land better trade deals. (Fun fact, Bessent was the former chief investment officer and a protege of billionaire George Soros, so the right may need to chase a new set of conspiracy theories or somehow make that appointment make sense to the anti-“globalist” set.)

The vast majority of economists, including his own Treasury Secretary nominee, believe that sudden tariffs would be inflationary. But despite this and warnings now from Walmart, Lowe’s and influential retail and trade groups, Trump is continuing his tough talk on tariffs. Many are hoping it’s all just bluster, and that actual implementation will go about as well as “infrastructure week” and the border wall Mexico was supposed to pay for.

Still, the threat of high tariffs is already causing companies to scramble to curry favor with Trump to receive tariff exemptions, as they did in Trump’s first term. And that might be what Trump is really after. 

To understand this, we need to rewind to the first time Trump imposed tariffs. After he announced sweeping import taxes on foreign metals, machinery, clothing and other products, the Trump White House set up a way to get around these through special exemptions, which could relieve tariffs by as high as 25 percent. 

As the New York Times reported,

That ignited a swift and often successful lobbying effort, especially from Washington’s high-priced K Street law firms, which ended up applying for hundreds of thousands of tariff exemptions. The Office of the United States Trade Representative, which handled exclusions for the China tariffs, fielded more than 50,000 requests, while the Commerce Department received nearly 500,000 exclusion requests for the tariffs on steel and aluminum.

In short, tariffs were very good for the swamp of D.C., and it gave Trump enormous leverage to force corporate America into line. If you wanted one of those exemptions, you had to grovel and kiss his ring. One study actually confirmed this, according to the Times:

The study, which looked at nearly 7,000 company applications, found that an increase in past contributions to Republicans raised the likelihood of a company’s receiving an exemption. A history of past contributions to Democrats, meanwhile, decreased a company’s chances of winning a lucrative exemption.

In any ordinary presidency, this would have been a huge scandal, but it barely registers in the corrupt regime of Trump.

Seen in this light, the threat of both mass deportations and sky-high import tariffs—two extreme, worst-nightmare level policies—hands Trump enormous power over not only people directly affected by them, like undocumented migrants and consumers struggling to get by, but also over the companies and billionaires who stand to profit or lose should these policies actually get implemented. 

And that kind of power could result in a lot of quid pro quo arrangements from a president as transactional as Trump.