The authorities want to reduce the country’s dependence on goods produced in China.
US lawmakers and other officials are preparing initiatives designed to persuade us companies to move production and critical suppliers from China.
As an incentive, tax incentives, new rules, and carefully structured subsidies are offered, as well as the creation of a particular Fund for the return of production with an initial budget of $ 25 billion.
President Donald Trump has long promised to bring back production from abroad. Still, amid the coronavirus pandemic and related concerns about over-reliance on China for food and medicine supplies, the White House is stepping up efforts in this direction.
On Thursday, Trump signed an Executive order granting the office of foreign investment new powers to help manufacturers in the United States. According to trump, the goal of the initiative is “to produce everything that America needs for itself, and then export to other countries, including medicines.”
However, even within the administration, there is disagreement about how best to proceed. It is unlikely that this issue will be addressed in the next package of anti-crisis assistance in connection with the coronavirus. Congress has already begun work on the next box, but it is unclear when it may be adopted.
Both Republicans and Democrats are preparing bills designed to ease US dependence on products made in China, which accounted for about 18 percent of total imports in 2019. Priority is given to medical and defense products.
In Washington, a controversial idea is being discussed to allocate up to $ 25 billion to companies that produce essential goods so that they can transfer production to the United States. Publicly, none of the congressmen supported this initiative, but it is known that it is discussed in Congress along with other ideas.
The idea of direct subsidies is controversial even among senior trump advisers.
White House economic adviser Larry Kudlow has publicly voiced the idea of tax incentives.
Trade adviser Peter Navarro would like the Federal government to buy more domestically produced medical products and medicines, but trump did not sign the Executive order he proposed.
Treasury Secretary Steven Mnuchin and several other officials advocate creating reliable supply chains for medicines and medical supplies.
Direct allocation of funds from the Federal budget to companies that agree to transfer production from China is likely to conflict with WTO rules. It may discourage foreign companies from doing business in the United States.
Meanwhile, the state Department is working with other agencies and foreign countries to diversify supply chains, both by returning production to the United States and by expanding the base of international partners.