General Electric took to Twitter to promote the following video critical of the tariffs:
Watch to learn more about how tariffs and trade tensions may impact U.S. businesses and consumers. pic.twitter.com/aZID4IqM3Z
— General Electric (@generalelectric) November 27, 2018
I think there’s no denying it’s a trade war. We’re talking about some very big numbers here. The U.S. has levied tariffs on $300 billion worth of imports and about $150 billion dollars of U.S. exports has been hit retaliation so far, and it’s not clear where the off-ramp is.
The costs are going to be mounting. It’s consumers who will pay at the end of the day. It’s American companies that will see their competitiveness reduced. They will find it harder to compete and win in global markets. Tariffs are not the right solution.
The U.S. has been on a ten year economic expansion that has gotten long in the tooth. It has also benefited big business and publicly-traded companies who have feasted on $30 trillion in stimulus from the Obama administration. Some have used the economic expansion wisely. Others like GE, squandered the good times via tens in billions of share buybacks and ill-timed acquisitions at the height of the market:
Under former CEO Jeffrey Immelt the company spent tens of billions on share repurchases when the economy was much stronger. New CEO Larry Culp wants to hive off assets to pare its $115 billion debt load to protect its credit rating. The problem is that GE’s core operations are in disarray. Its Power business was supposed to be a key catalyst, but it is currently being disrupted by renewable energy.
The company doubled down in the Power sector with its $14 billion acquisition of Alstom’s Power business a few years ago. The deal was ill-timed and a complete disaster. It led to more debt and more earnings erosion. GE is now cash flow challenged and its debt is trading at junk levels.
In Larry Culp, GE is on its third CEO in less than two years. The company has $115 billion in debt and tens of billions in pension and insurance liabilities it seems unable to pay. GE’s true talent is lobbying politicians for bail outs, tax breaks and protection. It is now under the protection of the rating agencies who will not lower its debt to junk status though GE appears on the brink of bankruptcy. Where’s Bernie Sanders?
GE and Larry Culp will need as many allies as possible to continue the give the company the same special treatment it received from Barack Obama and the rating agencies during the Financial Crisis. Given its weakened status and prior corporate welfare, it should be the last company crying about tariffs.
GE is spot on about Trump’s failed tariffs policy. However, it is the wrong company that should be making any noise.
