Power Alley: An Insurance Policy -- Against Tangerine 2.0 Tariff Threats, As To Pharma... ~$3 Billion In "New" Merck Cap Ex, In VA...

In truth, about $2 billion of this long-planned build out had been spent, and new buildings opened. . . all while Mr. Biden was in the White House. [Proof of that, here, and here.]

But with Tangerine 2.0 wildly (and chaotically) threatening new taxes and tariffs on imported pharma goods (and knowing that Merck has manufacturing operations in the EU, and Ireland), Mr. Davis wisely chose to make a PR dog and pony show of the last half of his build out plans, at Elkton, Virginia.

The only relatively consistent thing Trump has been saying all along, about avoiding newly imported pharma tariffs. . . is that if a given multinational company builds new facilities in the US, there will be "an exemption" from his tariffs. I'm not sure I'd believe he will ever do any of it, but Merck needed the extra capacity -- in any event.

So there is no harm in making a PR splash about the "$3 billion" ground-breaking in Virginia. Here's the latest, on it all:

. . .Pharmaceutical company Merck will make a $3 billion investment into building a manufacturing facility that’ll bring jobs to Rockingham County, according to Governor Glenn Youngkin.

“Merck’s transformational $3 billion commitment to locate its Center of Excellence marks a giant leap forward for both America’s and Virginia’s life sciences sector,” said Governor Youngkin.

“It deepens the company’s long-standing commitment to innovation and strengthens the Commonwealth’s position as the emerging national leader in biopharmaceutical advanced manufacturing and life sciences. With hundreds of new jobs and cutting-edge capabilities coming to the Shenandoah Valley, we’re building a future where Virginians lead the way in developing lifesaving medicines for patients around the world. . . .”

Now you know -- but it is (to me) fundamentally sad, that US political IQs have reached such a nadir, that Mr. Davis can safely match Trump's silly bleatings, with a "rope-a-dope" routine -- of his very own (and nearly no one notices). What a completely dumb. . . show. Normally, adding cap ex in large chunks tends dampens NYSE stock prices (on the involved company), but here it will be seen (at least by the "low-information crowd") as an "insurance policy" against new tariffs on Merck's life-saving (but presently non-US made) medical treatments. Yikes.

Personally, I am a firm believer in true "comparative advantage" economics. Merck ought to build wherever it can find reasonable access to water and power, and a skilled workforce -- at sensible labor rates. [Think. . . Ireland.] And then use that comparative advantage in manufacturing "savings" -- to limit price increases, in the US.

But pretty much the opposite is what Trump pushes: use high-priced, nearly-uneconomic labor in the US -- and pay extra for power and water. . . all so that Merck can effectively pay out higher taxes, to Trump on its pharma sales. What will actually happen then, is. . . that US drug prices will continue to rise, unabated, as ever. And TrumpRx is a silly. . . joke. It will amount to. . . nothing.

Damn. Out.

नमस्ते