Some senators want to increase taxes on U.S. companies’ income from China. Others want generous investment subsidies to get U.S. companies to produce more in the United States. There’s also discussion of a $25 billion fund to pay companies to exit China and come back to the U.S. The goal writ large: bring supply chains home.
“We could reshore thousands, hundreds of thousands, maybe millions of jobs if we could figure out how to bring many of that manufacturing capability back,” said Jeffrey Finkle, president of the International Economic Development Council, a group of local and state economic officials. Attention to reshoring jobs has been simmering for a while, but the supply chain shock of coronavirus has brought it to full boil.
“We discovered painfully we could not supply enough [personal protective equipment] for our health care workers,” Finkle said. He added that tax breaks or investment incentives have in the past been able to bring industries to specific locations in the U.S.
“Investment subsidies could increase American production of certain things,” said Chad Bown, a senior fellow with the Peterson Institute for International Economics. But he said that might not help in a future pandemic as much as people think.
“During the pandemic in the United States, we’ve had outbreaks of the disease at manufacturing plants, meatpacking facilities,” Bown said. Other countries, he said, could retaliate by giving their own businesses special treatment.
Rufus Yerxa, president of the National Foreign Trade Council, said tax breaks have their place, but there’s a limit to reshoring. Many companies have operations abroad in order to sell abroad.
Susan Lund, a partner at the McKinsey Global Institute, said there is an appetite right now for shifting supply chains around.
“Many companies are talking about diversifying their source of suppliers,” Lund said.
Between tsunamis and trade wars and global pandemics, it’s dawning on global businesses that having your manufacturing eggs in one basket is not a smart strategy.
“But that is different from production coming back to the U.S.,” Lund said. As per usual with international trade, things are never that simple.
COVID-19 Economy FAQs
What’s going on with extra COVID-19 unemployment benefits?
The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.
What’s the latest on evictions?
For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.
Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?
Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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