As Donald Trump celebrated his deal with Carrier to keep 1,000 jobs in the country Thursday, Sen. Bernie Sanders (D-Vermont) is warning that the deal should be cause for concern.
That’s because the President-elect managed to pull the deal off by offering the air-conditioner manufacturer by offering tax breaks to Carrier’s parent company—United Technologies—worth an estimated $700,000 annually for several years, a source close to the firm told Fortune. The company initially planned to send some 2,000 Indianapolis-based jobs to Mexico,
In an op-ed on the Washington Post, Sanders argues that in doing so, Trump had essentially awarded a company that was threatening to move abroad—a maneuver that may now be used by other U.S. corporations hoping to lower their costs.
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“He has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives,” Sanders wrote, noting that Trump has once threatened to make Carrier “pay a damn tax.” “Even corporations that weren’t thinking of offshoring jobs will most probably be reevaluating their stance this morning.”
The U.S. has a high corporate tax rate around 35%, which has triggered several corporate inversions deals in recent years, such as the now broken mega-merger between U.S.-based Pfizer and Irish drugmaker, Allergan. Trump has promised on the campaign trail to also lower corporate taxes to 15% in a bid to fuel investments and keep companies in the states.
“In essence, United Technologies took Trump hostage and won,” the onetime presidential candidate wrote. “And that should send a shock wave of fear through all workers across the country.“
