Most everyone knows the game Chinese Checkers. It's a marble game using one spot moves or jumps to move across the playing board to the other side and win the game. (https://en.wikipedia.org/wiki/Chinese_checkers). Simple right? Just figure out the best way to out-strategize your opponents' future moves.The winner, however, is usually the one who figures out how to jump over his opponents marbles the most times. If you don't jump, it takes longer to get across the board.
If we apply this logic to the current Administration's approach to business, one could make the argument that while the U.S. is making steady moves, we're slowly losing the game because we are getting 'jumped' by our opponents. While the recently enacted tariffs and EPA reversals have brought back a few jobs in the steel and coal industries, they are single space moves. They are not "jumps" in an industry as the technology applied is slowly being replaced by new technologies or other construction materials; the 'jumps are in new technologies like electric vehicles and renewable energies. So who is winning the game? Well while there are multiple players on the board, Europe, Japan, the U.S., etc, one could make the argument that it's the Chinese that are winning.
Want proof? Well recently we posted an article about BYD, the Chinese bus manufacturer that is making inroads in the American automotive market. (https://www.greenbiz.com/article/worlds-biggest-electric-vehicle-company-youve-never-heard). This week, an electric car company from China-SF Motors-purchased a shuttered U.S. Hummer assembly plant in Indiana with the intent to start sales next year.(http://www.autonews.com/article/20180530/RETAIL01/180539973/electric-vehicles-indiana-china-sf-motors)
If you turn to energy, 7 out of the top 10 solar panel manufacturers are from...you guessed it..China. There are few U.S. companies that build in America; most U.S. companies source their components from China. This is why the Trump Administration placed tariffs on Chinese solar panel imports.
Table: Top Solar Panel Manufacturers in 2018 – Global ranking by shipment volume 2017
Rank Company Headquarters
1 Jinko Solar China
2 Trina Solar China
3 Canadian Solar Canada
4 JA Solar China
5 Hanwha Q CELLS South Korea
6 GCL-SI Hong Kong
7 LONGi Solar China
8 Risen Energy China
9 Shunfeng China
10 Yingli Green China
*Source: pv-tech.org
The point here is one of tactics and focus. The recent tax reduction package that the Trump Administration passed was met with huge fanfare. The stock market went up along with 401k values. Corporate tax reductions will keep American company profits in the U.S. Everyone was happy right? Well, for now. Yet there are growing signs that the enormous windfall profits that companies are experiencing in 2018 are not going to new technologies and employee salaries as the Administration predicted. Rather they are going toward stock buy-backs and a small amount toward increased facilities. Who benefits from stock buy-backs? Shareholders and, in particular, top executives who own large quantities of corporate stocks. (https://www.nytimes.com/2018/02/26/business/tax-cuts-share-buybacks-corporate.html)
Is this the best tactic for the American economy? Well, not from an 'let's advance the U.S. share of future technology' standpoint. And especially not if the economy doesn't expand as forecast to recover the unbelievable loss in tax revenue included in the tax package for corporations. Could part of this tax reduction been done through incentives to develop new technologies? We will never know.
If it is a game of Chinese checkers, the U.S. better come up with some new moves...….fast. Or they will lose the game. Badly.
