In Brief: Bernanke on Trump, desk-top warriors & tariffs a tax by any other name


Bernanke buoyant

Ben Bernanke, the former Federal Reserve Board chairman, doesn’t see the current U.S. administration as a particularly significant driver of regulatory reform, despite President Donald Trump’s 2017 executive order that requires federal agencies to eliminate two rules for every new rule they issue.

"We’re not necessarily seeing a significant rollback of regulation," Bernanke, now a member of the Global Advisory Board at Pimco, told investors at the asset manager’s annual forum earlier this month.

However, he added: “The absence of any prospect for substantial further regulation removes a major source of uncertainty for many businesses.” 

Moreover, the former Fed chief said the Trump administration’s recent tax reform, along with a more business-friendly regulatory environment, could boost U.S. business confidence significantly.

“The move to a territorial tax system helps businesses make capital allocation decisions based on efficiency and strategy, not just tax awareness,” Bernanke said. “And they now feel they’re on a more level playing field relative to their non-U.S. peers.”

Bernanke joined Pimco, which has about US$1.75 trillion under management, in 2015 after serving as Fed chair from 2006 to 2014.

Office politics

A Michigan board of county commissioners tried to put patriotism over price earlier this year when it ordered U.S.-made office desks instead of cheaper ones from China.

The commissioners were willing to pay US$41,862, nearly 25 percent more than the Chinese-made option. But the desks were delivered to the Ionia County Courthouse in boxes marked "Made in China,” the Daily News in nearby Greenville reported.

The commissioners aren't happy and are demanding that the supplier takes back the furniture and replaces it with American-made products.

The county called a special meeting for this week to decide between three options: keep the Chinese-made desks and receive a discount, reorder the U.S.-made desks, or cancel the order altogether and request a refund.

Watch this (work) space.

Taxes vs tariffs

Could the Trump administration’s far-reaching tax reform of last year be overshadowed by the extra costs of a trade war with China? That’s a question the U.S. National Retail Federation is trying to find out.

A tit-for-tat tariff exchange with China, said federation president Matthew Shay, would “sap the energy out of the strong U.S. economy just as most Americans are starting to enjoy the benefits of historic tax reform”.

He cited a study conducted earlier this year for NRF and the Consumer Technology Association – downloadable here  – that found that tariffs on US$50 billion of Chinese imports would reduce U.S. gross domestic product by nearly US$3 billion and lead to the loss of 134,000 American jobs.

The threat to retail would be counterproductive to the administration’s tax reform agenda, José Tamez, managing partner at executive search and recruiting services firm Austin-Michael, told Drug Store News, a trade publication.

“There have been some broad statements from retailers about using the benefits of tax reform to invest in labor, whether it will be used for hiring more people or increasing pay, or investing in training and development,” he said.

Drug Store News notes that data from job-finding and recruiting website Glassdoor suggests retail salaries have been on the rise over the past four years: cashiers’ wages, for example, have increased more than 15 percent in that time, to a median base of about US$28,000. That represents a 3.4 percent increase in the past year.

Shay at the NRF appealed to Congress to scale back tariffs, arguing that the tax vs. tariffs question was a lose-lose option. “Tariffs are taxes on American consumers, plain and simple,” he said.