Silicon Valley’s boldfaced names are heading east to pay their respects to the president-elect at Trump Tower. Among the expected attendees at the Dec. 14 closed-door meeting: Apple CEO Tim Cook, Amazon CEO Jeff Bezos, Facebook chief operating officer Sheryl Sandberg, Oracle co-CEO Safra Catz, Cisco CEO Chuck Robbins, IBM CEO Ginni Rometty (who wrote a post-election letter to Trump on jobs and education), Intel CEO Brian Krzanich, Alphabet’s Larry Page and Eric Schmidt, Tesla and SpaceX founder Elon Musk, and Microsoft CEO Satya Nadella.
Trump has called on America’s successful tech firms to manufacture more of their products in the US, and already threatened to retaliatory taxes on companies who shifts jobs overseas. Peter Thiel, among the few tech sector luminaries to back Trump during the campaign, is involved in efforts to develop these policies. Apple founder Steve Jobs said in the past that building iPhones in the US isn’t an option. But Musk may have some ideas about what more can be accomplished, after creating two companies that make cars and rockets in the US.
Corporate tax rules
The discussion about domestic manufacturing is likely to lead to a closely linked item on Trump’s agenda: Corporate tax cuts and an effort to use the tax code to steer more corporate investment into the US. The ramifications of all of this are incredibly important to tech companies, five of which (Apple, Microsoft, Alphabet, Cisco, Oracle) boast the largest overseas cash holdings of any non-financial US firms. All told, the tech sector accounts for half of the $1.7 trillion kept outside the country by non-financial US firms, according to Moody’s.
These dollars are held abroad to defer taxes; much of the tax reform discussion will be focused on what it will take to bring them back to the US. Tech firms have been outspoken about their preference for an end to most taxes on their global profits, and expect that a Trump administration will deliver this for them, much to the dismay of those who are worried about increasing public debt and shrinking public investment.
Import and export taxes
But there is something even bolder in the offing that might raise concerns on California tech firm campuses. Republican lawmakers are preparing a plan that could give a major advantage to US companies relative to others in the world through a tax treatment called “border adjustment” (paywall). It would effectively lift most taxes on US exports while imposing a new tax on imports.
This would benefit domestic manufacturing, but hurt sectors that rely on imports, including consumer goods and energy. Already, a policy advisor at a traditional backer of Republican tax schemes, the petroleum conglomerate Koch Industries, has said the plan “could be devastating.” It would be just as bad for Apple’s mobile phones, computers, and tablets.
The potential plan’s effect on global supply chains isn’t the only concern. It may also violate global trade rules that America has pledged to obey. Businesses fret that retaliatory measures undertaken in response by Europe or China could lead to higher taxes abroad, new rules about business practices like where to locate servers, or even loss of market access.
Privacy and civil liberties
This initial meeting is expected to focus on this big intersection of Trump’s campaign promises and business realities. But many in the industry are also concerned about how the president will treat civil liberties issues.
This is a hot-button issue that predates the Trump campaign. But Trump’s threatening to ban Muslims from entering the US, his suggestion that libel laws ought to be loosened, and his pledge to deport millions of undocumented immigrants bring the matter of civil liberties into sharp relief. Some engineers at major tech firms have already circulated a petition promising they would never build a digital registry to identify people based on their religious beliefs.
Apple famously refused to help the FBI unlock an iPhone belonging to the perpetrators of the San Bernardino massacre in 2015, saying that such an action would set a precedent that would damage its business and its customers right to privacy. The company and its cohorts may face far tougher tests in the years ahead.