US lawmakers and officials are crafting proposals to push US companies to move operations or key suppliers out of China that include tax breaks, new rules and carefully structured subsidies.
Interviews with a dozen current and former government officials, industry executives and members of Congress show widespread discussions underway — including the idea of a “reshoring fund” originally stocked with US$25 billion — to encourage US companies to drastically revamp their relationship with China.
US President Donald Trump has long pledged to bring manufacturing back from overseas, but the spread of COVID-19 and related concerns about US medical and food supply chains dependency on China are “turbocharging” new enthusiasm for the idea in the White House.
Trump on Thursday signed an order that gave a US overseas investment agency new powers to help manufacturers in the US.
The goal is to “produce everything America needs for ourselves and then export to the world, and that includes medicines,” he said.
However, the administration remains divided over how best to proceed, and the issue is unlikely to be addressed in the next fiscal stimulus to offset the coronavirus downturn.
Both Republicans and Democrats are crafting bills to decrease US reliance on China-made products, which accounted for about 18 percent of imports last year.
“The whole subject of supply chains and integrity of supply chains ... does have a greater place in members’ minds,” US Representative Mac Thornberry, the top Republican on the US House of Representatives Armed Services Committee, said on May 7.
The medical supply chain and defense-related goods are top of the list.
“Coronavirus has been a painful wakeup call that we are too reliant on nations like China for critical medical supplies,” US Senator Lindsey Graham, a Republican, said on Friday.
He is expected to issue a new bill this week.
US Senator Josh Hawley, another Republican, is pushing for local content rules for medical supply chains, and “generous investment subsidies” to encourage increased domestic production of a range of goods and components.
US Senator Marco Rubio introduced a bill that would bar sale of some sensitive goods to China, and raise taxes on US companies’ income from China.
A bipartisan bill introduced by US Representative Anna Eschoo, a Democrat, and US Representative Susan Brooks, a Republican, would commission a panel to recommend ways to cut drug supply reliance on China.
US Representative Mark Green’s “SOS Act” proposes funding takeovers of vulnerable US firms critical to national security.
A controversial idea being floated would allocate as much as US$25 billion to firms that make essential goods to move production home, ensuring that even products far down the supply chain were sourced domestically, two administration officials said.
No lawmaker has publicly embraced it, but several congressional aides acknowledged it is part of the broader discussions.
However, given longstanding concerns about the government setting “industrial policy,” the notion of subsidizing industry directly is polarizing, even among Trump’s top advisers.
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