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Analyzing Claims of Business Investment Surge Under Trump
Former U.S. President Donald Trump frequently touted business investment as a key achievement of his administration, suggesting it rivaled his enthusiasm for tariffs. He claimed over $12 trillion had been “practically committed” during his time in office, attributing this to his policies of tariffs, tax reductions, and deregulation. But, is this surge of business investment truly setting the stage for a new economic boom, or is it an exaggeration?
Early Data and Initial Assessments
Assessing these claims requires careful examination of available data. Official business investment figures are published quarterly. Early data reflecting the initial months of Trump’s presidency showed a notable increase. However, analysts cautioned that these figures were potentially skewed by earlier events, such as a Boeing strike.
Other evidence, including surveys and anecdotal reports, indicates a more moderate impact on investment than Trump asserted. As economist Nick Bloom of Stanford University noted, most information likely reflects projects planned before Trump’s tenure, while heightened uncertainty may have temporarily curtailed further investment.
Examining Specific Investment Announcements
Swiss pharmaceutical firm Roche’s plan to invest $50 billion in the U.S. over five years serves as a concrete example. While the announcement was significant, some included projects were already underway. Furthermore, company executives cautioned that certain proposals, particularly those targeting drug pricing, could jeopardize their plans.
Trump often highlighted investment pledges from prominent companies like Apple and Hyundai. While the White House tracked these announcements, the figures often fell short of Trump’s claims. For instance, in early June, the White House recorded roughly $5.3 trillion in new investments, significantly less than the $12 trillion cited by Trump.
Discrepancies and Inflated Figures
Even this reduced figure appears inflated. Approximately one-third of the listed investments included projects that were at least partially planned prior to Trump’s presidency. Examples include:
- Stellantis: The company’s inclusion on the list for a $5 billion factory reopening in Belvidere, Illinois, was based on a promise initially made in 2023.
- Apple: The company’s $500 billion spending pledge encompassed aspects not typically classified as investments, such as taxes and employee salaries.
The Reality: Falling Short of Headline Figures
Goldman Sachs analysis suggests the actual new investment stemming from these announcements amounted to approximately $134 billion as of mid-May. Adjusting for the possibility of project failures or instances where investments would have occurred regardless, this sum dwindled to as little as $30 billion, excluding foreign government-backed investments.
The Goldman Sachs analysis concluded those figures, while still meaningful, “would fall well short of the recent headlines.”
White House spokesman Kush Desai dismissed concerns about the administration’s claims, asserting that the Trump administration employed a “multifaceted approach” to stimulate investment in the United States, the benefits of which could not be reasonably denied.
The Incentive to Exaggerate Investment Plans
Exaggeration by politicians and companies is not unusual. However, the Trump administration’s interventionist policies, including tariffs, created an incentive for companies to amplify their plans in ways that would favorably impress the president, according to Martin Chorzempa of the Petersen Institute of International Economics.
“A firm making an announcement is a way to get some current benefits, without necessarily being held to those [spending pledges] if the situation changes,” Chorzempa stated. “There’s a strong incentive for companies to provide as large a number as possible.”
Furthermore, while Trump’s policies have made a difference, the tariff threats have galvanized pharmaceutical firms to plan increased manufacturing in the U.S. Stephen Farrelly of ING notes that limitations exist; in fact:
- The pharma investments are set to unfold over time.
- They have come from firms selling brand drugs, not the cheaper, generic medicines that many Americans rely on.
And, the pharmaceutical sector’s investments may also be at risk over the long term. It’s all over continuing uncertainty about the government’s approach to both tariffs and drug pricing, as well as ongoing scientific research funding.
Many analysts anticipate slower investment growth in the U.S. due to policy uncertainty. Economist German Gutierrez of the University of Washington suggests that Trump’s focus on global competition overlooks the underlying issues, saying that a few large firms dominate sectors, and so there is less incentive to invest to compete.
Gutierrez notes that the current tariffs won’t address the existing investment issues. Gutierrez suggests they are not targeting the type of instruments they’re using and “it just takes a lot more to really get this going,”