Daily Management Review

Trump Issues Fresh Threats Of Taxes On US Firms That Manufacture Abroad


Trump Issues Fresh Threats Of Taxes On US Firms That Manufacture Abroad
A fresh threat of imposing new taxes on American companies that manufacture goods outside of the United States was issued by the US president Donald Trump on Thursday which, according to analysts, was another possible move by the US administration to woo away supply chains that are based in China and further raising up new trade barriers. 
Taxation companies manufacturing abroad was an “incentive” for companies to return manufacturing to the United States, Trump said in a Fox Business Network interview. Trump however did not clarify whether these new taxes will be across-the-board tariffs or another form of taxes that could need approval by the Congress.
“You know, if we wanted to put up our own border, like other countries do to us, Apple would build 100 percent of their product in the United States. That’s the way it would work,” Trump said.
These announcements are measures for the Trump administration’s effort to “turbocharge” the process to push companies to move production of away from China, said US officials to the media, which were are being seen as a way, in part, to take punitive action against Beijing for its early handling of the coronavirus outbreak.
When Trump was asked whether he would also be considering giving companies tax breaks if they chose to return manufacturing operations back to the US, the president said he may tax them if they don’t while suggesting that American companies were duty bound to re-shore their manufacturing operations.
“One incentive, frankly, is to charge tax for them when they make product outside. We don’t have to do much for them. They have to do for us,” Trump said.
Much of the time of the first three years as president was spend by Trump in waging a trade war against China over its trade practices, technology transfer and industrial policies as his administration imposed import tariffs on Chinese goods into the US worth a total of $370 billion.
According to Commerce Department data Trump’s new tariffs had cost American companies $46 billion by January, before the coronavirus spread globally.
Calls to Trump to cut tariffs, even if temporarily, have been made by many business groups and economists so that the cost pressures on American companies are reduced in the face of severe drops in revenues.
If countries impose new trade barriers, the current and the worst recession since the 1930s Great Depression because of the novel coronavirus pandemic will be prolonged, the International Monetary Fund has warned.
Global supply chains were described as “stupid” by Trump on Thursday. he is seeking to get reelected as US president once again in November and needs to win key manufacturing battleground states such as Pennsylvania, Michigan, Ohio and Wisconsin. He also said that the weaknesses of the global supply chains was exposed as critical products are cut off because of the coronavirus pandemic.
“I said we shouldn’t have supply chains. We should have them all in the United States. We have the companies to do it. And if we don’t, we can do that,” he said.