Fred Smith, CEO of FedEx, is pushing back against the new administration’s stance on trade.
In an interview with Fox Business Network’s Maria Bartiromo, Smith criticised President Donald Trump’s decision to sign an executive order on Monday that states his intent to pull the US out of the Trans-Pacific Partnership trade pact and displays his more protectionist stances.
Smith said that trade has played a key part in growing the US economy for centuries and can continue to contribute to the growth.
“About 40 million Americans including lots and lots of FedEx folks make their job in trade,” said Smith. “40 million Americans, about 27 per cent of entire economy is related to trade. 95 per cent of the world’s consumers aren’t in the United States they’re elsewhere around the world. 80 per cent of the purchasing power.”
Additionally, Smith said that removing the US from trade deals could be detrimental to the health of the economy.
“So the United States being cut off from trade would be like trying to breath without oxygen,” said Smith. “It’s an essential part of our economy.”
In addition to pulling out of the TPP, Trump also suggested that companies who move production out of the US would face a “very major border tax” and has discussed possible tariffs against different countries.
The US pulling out of the TPP also allows China to step into the void, according to Smith, allowing them to grow their influence in Asia and across the global economy.
“I think the decision to pull out of TPP is unfortunate because the real beneficiary of that is China,” said Smith. “And China has been very mercantilist, very protectionist. They have engaged in industrial policy to the disadvantage of American and European countries.”
Smith also stressed that instead of attacking China, as Trump has done from time to time, the US should push to open up trade with the country more because there is an “opportunity to sell huge amounts of goods into China.”
The FedEx CEO also noted that there is good reason for Americans to be sceptical of trade because it is hard to discern the benefits of the policies while the pain is obvious. Said Smith:
“Well again the benefits of trade are diffuse. They’re spread among many people. The pain is localised. That’s really the problem. When you lose a plant in New Hampshire and it goes to South Carolina everybody’s OK with that. And that’s basically the history of the 19th Century in the United States. But when that factory goes abroad and produces good products that come back in the United States that creates a political issue.”
Despite these issues, Smith reiterated that maintaining a push for more global trade is a beneficial policy for the US economy.
To be fair, Smith and FedEx would benefit from more global trade since they deliver packages, but as a CEO of a company operating within the world’s largest economy the comments are of note.