U.S. companies have been manufacturing goods and sourcing parts from China and other nations for decades.
Although the coronavirus pandemic made clear just how fragile those massive supply chains can be, the potential for severe disruption alone apparently isn’t enough to persuade companies to return stateside on their own.
So some government officials are hoping some cash will do the trick instead.
Reuters, citing discussions with White House officials, members of Congress and industry observers, reports that policymakers are considering several measures designed to get essential companies in the defense and medical sectors to move their supply chains to the U.S.
One floated by a pair of Trump administration officials would establish a “reshoring fund” of $25 billion that could be distributed to — and administered by — states’ economic development agencies.
Proponents say the initiative, or something similar, is needed to ensure the nation’s necessities don’t rely on operations located far overseas and under potentially adversarial governments. But the measure is fraught with potential headaches beyond its significant price tag.
For one, even though one official ruled out direct subsidies to companies, critics say it likely still violates World Trade Organization rules.
For another, subsidizing businesses is a political landmine in and of itself — and this money could be headed to companies that, in some cases, laid off U.S. workers to chase lower labor costs an ocean away.
No members of Congress have signed onto the proposal, according to Reuters, and some are looking at other options, including regulations on medical supply chains, raising taxes on companies’ income from China, or funding takeovers of vulnerable companies considered vital to national security.
Some lawmakers are hopeful that their reshoring efforts will be included in a must-pass annual defense spending bill.