Trump Offers Cash Incentives For American Firms Moving Factories Out Of China

The United States President Donald Trump has offered tax credits to any American company ho that decides to shift its production units out of China.

At the same time however Trump also threatened that those American companies that still continue to outsource work to China will b barred from participating in any government contracts.

Vowing to create 10 million jobs in 10 months, in a speech on Monday on Trump said: “we will end our reliance on China.”

This is the latest salvo fired by Trump against China following his orders of banning the Chinese chat app WeChat, owned by Chinese etch giant Tencent, and ordering another Chinese firm ByteDance, the owner of the popular short video sharing app TikTok, to sell off the US operations  of the app in 45 days to an American  company.

The latest salvo against China from Trump came at a time hen the tensions between the two countries has escalated in recent months over a host of issues including the allegations by Trump of China hiding early truth and facts about the novel coronavirus from the rest of the world.

The Trump administration is now casting its net beyond the Chinese technology companies it has accused of threatening US national security.

“We will create tax credits for companies that bring jobs from China back to America,” Mr Trump said. “We built the greatest economy in the history of the world and now I have to do it again.”

After having been put on  so called list of entities of the US Commerce Depart which effectively barred the Chinese telecom maker Huawei form having any transactions with American companies, it has been reported that the Trump administration has now placed fresh restrictions on the Chinese firm to cap its ability to purchase electrical components.

Apart from TikTok and WeChat, threats of including more Chinese technology companies on its blacklist of companies which face bans in the US has also been issued by the Trump administration.

In the wake of the November Presidential election in the US which is being contested by him, Trump has allegedly upped the ante in targeting China with accusations that Chinese companies regularly steal American jobs and intellectual property.

“We will make our critical drugs and supplies right here in the United States”, Trump also said in Monday’s speech.

Many American companies manufacture their products meant for the US consumer in factories outside of the country in a business process known as outsourcing. A Taiwanese firm called Foxconn is used to make the majority of its best-selling iPhones by America’s most valuable public company, Apple. Foxconn has factories in both China and Taiwan.

Some of the other iconic American brands, such as Nike, also operate large manufacturing units in China as well as in other parts of Asia.

But since the emergence of the novel coronavirus pandemic out of China at the beginning of the year and the subsequent shutdown of businesses and manufacturing units in the country, resulting in upending of their supply chains, many of the global brands that have manufacturing operations in China have been reviewing their Chinese operations.

China, also often referred to as the “factory of the world”, has taken a hit in its exports because of the trade dispute with the US and the coronavirus pandemic.

(Adapted from BBC.com)



Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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