Could the US Pay Companies to Leave China?

Could the US Pay Companies to Leave China?


The Trump administration is encouraging American companies to bring their production facilities back to the U.S. from China – and one top official claims that it will pay them to do it.

"We welcome any Americans companies in Hong Kong or China mainland, we will do what we can for full expensing and pay the cost of moving if they return their supply chains and their production to the United States," chief White House economic adviser Larry Kudlow told Fox Business on Tuesday.

Kudlow provided no further details, but he has mentioned something similar in the past. Last month, Kudlow, who serves as the director of the National Economic Council, said the U.S. should “pay the moving costs” of companies that leave China, with the payments apparently consisting of tax breaks. “I would say, 100 percent immediate expensing across the board for plant, equipment, intellectual property, structures, renovations ... In other words, if we had 100 percent immediate expensing, we would literally — literally pay the moving costs of American companies,” he told Fox Business.

Reuters reported last week that administration officials and lawmakers are discussing a range of options to encourage companies to move production facilities back to the U.S., including a possible $25 billion “reshoring fund” that would provide direct payments to firms. That particular option has met resistance, however, due to worries that paying companies would amount to the government setting industrial policy, which has long been opposed by Republicans as interference in the free market.