While the incoming administration’s immediate priority is to address the COVID-19 pandemic, Pres-Elect Biden also vows to rehabilitate the country’s economy.
During his 4-year term as President of the U.S., Mr. Biden plans to encourage American manufacturers to produce products “made in all of America”. The incoming president’s goal is to make sure there will be an increased observance of the “Buy American” rule among local consumers. That way domestic manufacturing in the country will in turn result in the creation of more production jobs for U.S. citizens.
How Does Future President Biden Plan to Carry Out “Made in All of America” Scheme
Part of President-elect Biden’s plans for the economy includes adding a 10% tax on U.S. firms with overseas manufacturing affairs. This is to discourage and counter potential loopholes that make it possible for multinational US firms to conceal from the Internal Revenue Service (IRS) their actual profits from offshore operations. As an incentive, the new POTUS will recommend proposals in helping local businesses reinforce their operations by being rewarded with a 10% tax credit.
However, with all the President-elect’s plans for the country, such as major investments for restoring the country’s collapsing infrastructure and improving the education system, the Biden administration will require a substantial amount of federal funding in order to achieve such goals. One of the main considerations is to increase taxes imposed on well-off American citizens, as this would offset the $1.5 trillion tax savings that the wealthy sector enjoys through the Trump administration’s introduction of tax cuts for the country’s billionaires.
Moreover, as American manufacturers strive to produce 100% Made in America products, commitment to this program will reduce if not eliminate the demand for Chinese raw materials, components and spare parts. If this plan succeeds, there will be no complaint about the huge gap between U.S. and China Trade. Mainly because the U.S. will no longer be buying more Chinese products than what China buys from the U.S.
Still, financial analysts and trade experts cite certain drawbacks that will make it difficult for the Biden administration to achieve such goals. Since they are still plans, they need legislations to which Congressional approval depends if the Democratic Party will take away majority control of the Senate House from the Republicans.
During Trump’s term, the Republicans maintained majority control, which Republican Senate Majority Leader Mitch McConnel exploited by blocking if not voting down nearly all House Democratic proposals passed on to the Senate. In fact such actions earned him the moniker “Grim Reaper” of which McConnell took pride as a title. .
Businesses Might Clamor for the Immediate Rollback of Tariffs Imposed by Trump on Chinese Imports
According to trade experts, while the president-elect may be tied to his Made In America pledge, he will also be forced to lift Trump’s tariffs on Chinese goods. Doing so will remove a leverage that President Biden could use in negotiating trade concessions with China. While the policies to support the Made in America program is still in the pipeline, or at worst blocked by the Senate Grim Reaper, local manufacturers and business could clamor for the reversal of the tariffs as they are additional costs being borne by US importers.