In an interview with CNBC’S Squawk Alley, Intel Corp. (INTC) CEO Brian Krzanich said he advised President-elect Donald Trump to create a more favorable environment for manufacturing in the United States. During a conversation at the Consumer Electronics Show (CES 2017) in Las Vegas, Krzanich discussed the focus of a recent meeting that he attended between Silicon Valley executives and Trump’s transition team.
The president-elect has been very critical of companies that manufacture products and components outside of the United States and has hinted a willingness to impose steep tariffs on goods coming from China and other nations. Intel is one of the few companies in its industry that manufactures the bulk of its products in the United States. The firm's largest facility is located in Hillsboro, Oregon, where it is the state's largest private employer.
Intel is interested in Trump's trade policies because of its impact on global markets. The firm sells roughly 75 percent of its products to international markets, and China has become a major sales destination for U.S. semiconductor companies. (See also: China Threatens U.S. Imports Will Fall If Trump Imposes Tariffs.)
"China's an important market for us. It's the fastest growing market we have," Krzanich said.
Krzanich said that his fellow executives advised the president-elect to avoid a trade war and instead create a more business-friendly environment in the United States. The CEO stressed corporate tax reform as a first step, but he did not elaborate on what other policies and deregulatory efforts would help Trump reach that goal.
"The real answer is not a trade war. It's not restrictions," Krzanich told CNBC. "It's really about making the U.S. more competitive, lowering the tax rates [and] making it easier for people to do manufacturing here."
Trump has said that China has exploited the United States economy. The president-elect has considered steep tariffs on Chinese imports. Some economists view this as the first step toward a possible trade war between the world's two largest economies.
A trade war could have devastating consequences for both nations. U.S. companies would see reduced access to China's low-cost labor, the U.S. government would have reduced access to China's huge appetite for Treasury bonds, and American consumers would pay more for inexpensive imports. (See also: The Reasons Why China Buys U.S. Treasury Bonds.)
Chinese companies, meanwhile, would see reduced access to the world’s largest consumer market, its investors would have limited access to U.S. capital markets and the nation’s economic growth could experience a slowdown. (See also: How Will Trump's Policies on China Impact U.S. Business?)