The Trump administration speaks a lot about Stoking American Business Investment, an admirable and important goal. In March on social networks, President Trump said That his first two months have seen more private investment “spoken and / or committed” than the previous four years. Glenn Kessler of Washington Post note that the president’s complaint compared the apples (by focusing on the money spent to develop new factories) with oranges (waves business announcements on future investment).
This month, Trump justified his raft threatened with an increase in world prices with a similar affirmation: that the commercial barriers erected would stimulate an increase in investments. In his white house rose garden, “Liberation Day” speechThe president said: “Many of the largest companies in the world, they have undertaken to build, to build, to build.” We are going to build, build, build, sir “.
Which neglects the economy. Prices make it more difficult for companies to invest. And even now that some of the most flagrant samples have been interruptedHistorically important global prices remain in place. The comings and goings of the size and calendar of these trade taxes amortizes investment by refusing to companies the predictability and stability they need in the business climate.
This effect goes beyond well-documented and serious threats to consumer prices and inflation posed by a trade war. Commercial investment generates long -term growth in productivity which contributes to American living standards and prosperity. It includes the construction of factories, energy production and the construction of equipment that allows manufacturing. It also includes research and development, encouraging innovation in our heavy economy of services.
We know the conditions under which companies strengthen investment. When economic growth accelerates, business leaders become more confident than their investments will produce returns and can invest more. When business leaders may be reasonably convinced that the commercial climate is not subject to a radical change of policy, such as pushed prices, they are more likely to invest. And when companies can have cheaper access to market capital and other inputs, they can invest more. Governments should strive to improve these conditions, providing for broad economic growth and wide access to capital.
The existing and threatened prices of Mr. Trump undergo these conditions. In the wake of the announcement of the Liberation Day, JPMorgan economists expected the prices cause a recession this yearAnticipating a drop in demand from consumers and investors. Mr. Trump’s 90 -day break on the most important prices can mitigate this risk, or persistent uncertainty can exacerbate it. Last week, the LAB budget at the University of Yale reported That it expects the current tariff policy to constantly narrow our annual economic production of $ 170 billion in today’s dollars as our ability to produce goods and services decreases.
The recent market slide, which anyone checking a 401 (K) could see, shows that it becomes more difficult for companies to raise capital. Companies generally finance new investments by collecting stock market funds or using money on the debt markets. A volatile and still depressed stock market makes the first option more expensive. Initially, long -term interest rates – which reflect the loan cost of companies – fell following the announcement of Mr. Trump, who made the second option a little cheaper. But last week, they climbed heavily, which also makes the second option more expensive. Even after Mr. Trump’s return, the chaos on the market induced by the prices leaves the more difficult conditions to finance new investments.
Economists have already reduced their expectations of private investment. Before the elections, the professional forecasters interviewed on the Bloomberg terminal expected that real private investment increased by 2.9% in 2025. In February, this forecast fell to 2.4%, as the probability of promulgating a protectionist trade policy increased. At the end of March, this forecast was 1.8% – well below the post -pandemic average.
Some business leaders already say that they invest less in response to the volatility of the prices, even in the industries that the administration tries in theory to protect. This reflects uncertainty The prices have placed on the markets.
Take the energy sector which, with higher prices, faces higher and uncertain costs for drilling equipment. In a investigation Through the Federal Reserve Bank of Dallas, oil and gas leaders explicitly blamed the uncertainty linked to the prices for their hesitation in investing. This could threaten the position of the United States as the largest oil producer, cutting against the administration “Energy dominance“Strategy. Coupled with threats to green tax credits from the Biden administration for vehicle batteries and renewable energy production, we risk discouraging traditional and clean energy production.
The construction of artificial intelligence infrastructure become more expensive; Microsoft has Construction of the slowdown data center In three American states. Telecommunications analysts expect Slower upgrades to wired networksGiven the higher cost of pricing network equipment.
Small businesses are particularly affected: in February, the chief executive officer of the producer of Brounbon belonging to the Black Brugh Brothers Brothers Spirits Group in Kentucky said The time which, in a tariff climate, had to reduce some of its expansion plans, saying: “It is simply very difficult to make any kind of commercial decisions.”
Research and development expenses are an important element in private investment in the US economy heavy with services, including for pharmaceutical companies, such as Eli Lilly and its competitors. But Eli Lilly also depends on foreign manufacturing: its managing director said This month, it expects to reduce R&D investment to manage costs focused on prices. This is particularly a bad timing to lose the investment in R&D of companies, because the administration has also decided to stifle the financing of R&D to government and universities.
The Trump administration recognizes the power of business to innovate, increase productivity and help provide largely shared prosperity. But go everything on the prices restricted this power by making companies more difficult for investments. Business investment growth was a unknown hero From our economy in recent years, but we need more, no less.