WASHINGTON (Reuters) – President Donald Trump threatened on Thursday to impose new taxes on American companies that produce goods outside the United States, another move his administration could make to push supply chains away from China and raise new trade barriers.
FILE PHOTO: U.S. President Donald Trump and China’s President Xi Jinping pose for a photo ahead of their bilateral meeting during the G20 leaders summit in Osaka, Japan, June 29, 2019. REUTERS/Kevin Lamarque
Trump said in a Fox Business Network interview that taxation was an “incentive” for companies to return manufacturing to the United States. He did not specify whether these would be new across-the-board tariffs or another form of taxes, which would require an act of Congress.
“You know, if we wanted to put up our own border, like other countries do to us, Apple would build 100 percent of their product in the United States. That’s the way it would work,” Trump said.
U.S. officials say that Trump’s administration is “turbocharging” efforts to push companies to move production of away from China, partly as a way to punish Beijing for its early handling of the coronavirus outbreak.
Asked whether Trump would consider giving companies tax breaks to return manufacturing operations to the United States, he said he may tax them if they don’t and suggested they had a duty to re-shore operations.
“One incentive, frankly, is to charge tax for them when they make product outside. We don’t have to do much for them. They have to do for us,” Trump said.
The former real estate developer spent much of his first three years in office waging a trade war against China over its trade practices, technology transfer and industrial policies, imposing punitive tariffs on $370 billion worth of Chinese imports.
By January, before the coronavirus spread globally, Trump’s new tariffs had cost American companies $46 billion, according to Commerce Department data.
Many business groups and economists are calling for Trump to cut tariffs, at least temporarily, to ease cost pressures on U.S. companies facing severe drops in revenues.
The International Monetary Fund has warned that raising new trade barriers will prolong the worst recession since the 1930s Great Depression.
On Thursday, Trump, who is seeking re-election in November and needs to win key manufacturing battleground states such as Pennsylvania, Michigan, Ohio and Wisconsin, called global supply chains “stupid” and said the coronavirus has exposed their weaknesses as critical products are cut off.
“I said we shouldn’t have supply chains. We should have them all in the United States. We have the companies to do it. And if we don’t, we can do that,” he said.
Reporting by David Lawder and Heather Timmons; Editing by David Gregorio