Lawmakers Consider Tax Breaks and Subsidies to Push American Companies Out of China

United States lawmakers are mulling proposals that could push American companies to move their supply chains out of China.

According to Reuters, which conducted interviews with a dozen current and former government officials, “widespread discussions” to sway firms from doing business in China are currently underway. Congressional leaders and industry executives have indicated that these talks included considerations of tax breaks, subsidies and other incentives, such as a possible $25 billion “reshoring fund” for companies that make essential goods.

Both Republican and Democratic parties have been working on bills to reduce the U.S.’s reliance on China-made and -manufactured products, which represented roughly 20% of overall imports last year. What’s more, President Donald Trump has long pledged to bring manufacturing back to the U.S. and has ramped up his rhetoric against China ahead of the 2020 presidential election in early November. (He has also been critical of the country’s alleged mishandling of the coronavirus outbreak, which originated in the Chinese city of Wuhan in December.)

Late last week, Trump signed an executive order that would direct hundreds of billions of dollars in federal financial assistance toward American-manufactured products. The order — an extension of the “Buy American” strategy he introduced during his few months in office — came just 10 days after reports emerged that the president was accelerating his efforts to push global industrial supply chains out of China.

Washington has also threatened to issue new duties on Beijing in addition to the up to 25% tax on $370 billion worth of Chinese products that are currently in place. Over the past four years, tariffs have been a significant focus in the White House agenda amid countless developments in the U.S.-China trade relationship. Many businesses have called on the Trump administration to ease import taxes as they face pressure to preserve cash flow at a time when funds are increasingly dwindling due to widespread store closures and subsequently declining sales.

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