Yahoo Finance Howard Schultz: The US can't isolate itself from the rest of the world
Starbucks chairman emeritus Howard Schultz argues that the U.S. and China should work to find common ground amid ongoing trade tensions.
Starbucks (SBUX) currently operates around 3,500 stores in China and is opening a new one every day. What’s more, the Shanghai Roastery is the most successful store in the world for the coffee giant.
“Thus far, the tariffs that have existed in the trade war that’s currently going on between the U.S. and China has not really affected Starbucks. But what I would say about this is it’s in the interest of both America and China to find common ground, and there are many things that are in our mutual interest. In addition to that, it’s in the interest of the world for China and the U.S. to find things that we can do together to enhance the rest of the way.”
Schultz pointed to China’s One Belt Road initiative, which he described as “a super infrastructure highway” that’s going to bind countries together to produce an “economic powerhouse in terms of trade.”
“Now they’re going to invest trillions of dollars over a long period of time. To do that, we have to understand that if we want to maintain, as a country, our economic leadership around the world, then we have to be open. We can’t isolate ourselves from the rest of the world, and we have to be in many ways as committed to the long-term investment and strategic thinking. That’s what the Chinese are dealing with One Belt Road. So the bottom line is China, to me, is not an adversary. They are a competitor, and we have to do everything we can to compete with them and also to find ways to cooperate with them when it’s in our national interest.”
Millions of Americans left behind
Meanwhile, back in the U.S., it’s been 10 years since the global financial crisis. During that tumultuous time, Schultz returned to Starbucks as CEO and embarked on a transformation. Ten years later, the economic data is healthy and the stock market has continued to touch new highs. But not everyone is benefitting, said Schultz.
“I want to say the economy is strong for many people, but there’s millions of Americans that are not participating in the economic growth,” he said. “So just some facts that we should establish. Over 40% of American households do not have $400 for a crisis. Almost 6 million young people in America, ages from 16 to 24 are not in school and not working. So, the economy, if you use the stock market as a proxy, is wonderful, but millions of Americans are not participating and are being left behind.”
Schultz, now the chairman emeritus of Starbucks, added that there’s much work to do to address the inequities that exist in the U.S. The impact of tariffs could be a tax on consumers.
“Whether or not the stock market continues to perform at this level, I don’t know. But, I think there’s other issues about leadership and integrity and values and decency and the divisiveness that we now have — I think the issue issues with trade and tariffs — ultimately the burden is going to fall on the consumer and that could be a consumer tax on products and services. So I would much rather see an opportunity for a much more predictable situation than the episodic things that we seem to be dealing with in the U.S.”
Schultz spoke with Yahoo Finance in a wide-ranging conversation ahead of the debut of Starbucks’s Reserve Roastery in Milan — the inspiration for the modern-day Starbucks. The Roastery officially opens on Friday, September 7, the anniversary of the day Schultz joined Starbucks in 1982.
After a trip to Milan in 1983, Schultz was inspired to transform what was then a small Seattle-based seller of whole bean coffee into the global enterprise it is today. This marks Starbucks’s first entry into the Italian market.
Schultz stepped down as CEO in April 2017. This June, he stepped down from his role as chairman.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.
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