Yesterday I wrote an article titled: "Should we pay companies to move manufacturing out of China?" In it, I suggested (bold, underlined text is my emphasis):
Aid can be given to help critical industries diversify production, so that it's spread across several countries in more than one region (thereby preventing loss of production in one country from shutting down manufacture of that product altogether). Additional subsidies to bring at least part of that manufacture back to the USA might also be feasible. They might not involve payment up front, either: if the US government guaranteed the purchase of a given amount, or a given proportion of domestic production, that might be sufficient incentive.
Well, guess what? Within hours of my publishing those words, Presidential economic advisor Larry Kudlow, who's also the Director of the United States National Economic Council, was interviewed by Fox Business. At about 8m. 35s. in the interview, he had this to say:
A 100% tax write-off of all expenses involved in moving production from China back to the USA? That's a good start, and demonstrates I wasn't far off the mark. I have little doubt additional subsidies will be made available once our economy is firing on all cylinders once more.
I suspect a public avowal like that of support for manufacturing repatriation is unlikely to please China. We'll have to see what their reaction might be: positive, negative, or a combination. They can crack down on US companies already there, or offer them incentives to keep their production in China, or both. Which way will they jump? One thing is for sure; they'll put their own interests ahead of those of the United States. That's a given.
Peter
