Kitchen Table Economics

Attracting Manufacturing Back to the U.S.

Americans are familiar with seeing the “Made in China” sticker on products we buy at the store or purchase online. But why is that? 

Beginning in the 1980s, China began to attract American manufacturers. While labor costs were a factor, government regulations imposed on businesses in the U.S. also helped to push companies overseas. Just how taxes can directly cost businesses money, the time and energy spent complying with government rules can have a similar effect. 

For example, complying with employment and labor regulations, as well as keeping up with various other business and pricing rules are all reasons why companies relocated. As a result, doing business in China became more attractive than remaining domestic.

It’s critical for the U.S. economy to bring manufacturing back home. Not only will the facilities provide jobs, but the coronavirus pandemic has highlighted the dangers of being dependent on foreign power for critical goods.

The Trump administration has already stripped many of the regulations away. In fact, during President Trump’s first year in office, he said that over 1,500 regulations were rolled back or eliminated. And recently he directed the heads of agencies to “to use any and all authority to waive, suspend, and eliminate unnecessary regulations that impede economic recovery.” These changes need to remain in place and efforts to thin them further should continue. Additionally, the federal government should offer returning companies a tax cut. Larry Kudlow, senior White House economic advisor, recently said the President is mulling over the idea of cutting corporate tax rates in half for American companies that bring production to the U.S.

Encouraging manufacturing to take place on U.S. soil will be a win for all Americans. It’s time we get it done.