By Joel D. Joseph, Founder, Made in the USA Foundation
President-Elect Biden's recognition of the need to make products in the USA as a part of his environmental plan helped him win the 2020 election. He should build on expanding American manufacturing to enhance his majority. Trump's victory in 2016 was primarily based on the Rust Belt's loss of manufacturing jobs. In 2016, Trump flipped Michigan, Wisconsin and Pennsylvania because of NAFTA and other trade deals. The United States lost two million manufacturing jobs to Mexico and five million to China over the past twenty years. That is why Trump won in 2016 and got 70 million votes this year.
To reach Trump's rust-belt and blue-collar voters, President Biden can start three major initiatives: 1. Government purchases of U.S.-made products; 2. Tax reform for American manufacturers; and 3. Advertising laws that require country-of-origin disclosure.
Joe Biden has already announced that he wants all new federal government vehicles to be electric cars and trucks made in the USA. That is a good start. The federal government owns thousands of retail stores on Air Force, Army and Navy bases. These stores are AAFES (Army Air Force Exchange Serve) and NEXCOM (the Naval Exchange Service Command). Commonly known as PXs, these stores sell $10 billion worth of mostly imported goods, from tires to clothing, food to washing machines. They now sell more Chinese products than American-made goods. Requiring the PXs to buy American will create 100,000 manufacturing jobs in the United States and set an example for the country.
Manufacturing Tax of Zero
President-Elect Biden has announced that he wants a corporate income-tax increase from 21% to 28%. I suggest that this be modified to provide companies manufacturing in the United States with a reduced federal income tax. This law, which I call the "Manufacturing Tax of Zero," would reduce income taxes for companies actually manufacturing in the United States on a sliding scale. If their products are 50% made in the USA, the company would be taxed one-half of 28% or 14%. Similarly, if the products are 100% made in the USA (a very difficult task) the company would pay no federal income tax. Since manufacturing represents only about 12% of the U.S. economy, this tax break will not break the budget. Looking forward, if passed into law, the Manufacturing Tax of Zero would encourage more companies to reshore production to the USA bringing millions of jobs back.
Now most U.S. pharmaceutical companies have relocated to Ireland because of its 12% corporate income tax. Trump's reduction of the tax rate to 21% didn't budge the needle on getting these companies back, but a zero tax rate would.
Country-of-Origin Advertising Law
Congress could pass a law requiring country-of-origin notification on television, radio and print ads. The law now requires notification of the country of origin on the product itself, but with more and more Internet shopping, consumers are buying blindly. For example, a television ad for a Ford Mustang would have to say "Assembled in the USA," while an ad for a Dodge Charger would have to announce, "Product of Canada."
Many consumers and Trump voters care where their products are made. Congress passed the American Automobile Labeling Act in 1992 to require country-of-origin information on the window sticker for all new cars and trucks. In 2002 Congress passed the Country of Origin Labeling Act (COOL) for food products. Both of these laws were passed with broad bipartisan support. COOL was sponsored by a Republican Congresswoman in the House of Representatives, with 107 co-sponsors, and with a lead Democratic sponsor in the Senate. I worked on both bills before they became law with a diverse group of supporters, from fisherman to potato farmers, labor unions and manufacturers.
Red-state farmers and ranchers were big supporters of the COOL legislation. After COOL became law, Canada and Mexico filed a complaint with the World Trade Organization (WTO) challenging the country-of-origin labeling on meat products required by the United States. President Obama and Congress caved in and now we have North American meat. Ground meat sold at your local grocery store may contain beef from Canada and Mexico. U.S. farmers and ranchers want country-of-origin meat labeling to be reinstated. American cattlemen have lost more than $20 billion because of this law change. The cattle ranchers thought that Trump would get it changed, but he failed to do so.
President-elect Biden can show these red-state voters that he has their back now by getting meat labeling reinstated. Biden should be able to convince Prime Minister Trudeau and Andre's Manuel López Obrador, and Congress, that country-of-origin labeling is not a trade barrier.
If Biden gets these three changes made he will have gone a long way toward reuniting the country. It will also bring millions of jobs back to the USA and jump-start our economic recovery.