WASHINGTON—White House chief economic adviser Larry Kudlow says the Trump administration could create financial and credit incentives to help re-shore U.S. manufacturing and jobs.
“It’s like the prodigal son in the Bible; you know, we want the prodigal son to return home,” Kudlow said on Sept. 11 at the virtual annual conference of the U.S. Export-Import Bank (Exim).
“And we will have open arms for the prodigal son and bestow upon him or her whatever riches and rewards we can.”
Supply chain disruptions caused by the pandemic have accelerated the need to bring production of critical materials back to the United States.
Besides tax and regulatory incentives, the administration “can create financial and credit incentives,” which have become “a very important part of our overall macro policy view,” Kudlow said.
He also stressed the importance of Exim, calling it a key factor in the United States’ ability to compete with China.
The U.S. export credit agency faced a critical survival battle last year as some Republican lawmakers called for the bank to be liquidated. Critics say that the bank is used as a tool by the United States to subsidize exports and to help mainly politically connected giant corporations.
The credit agency, however, has gained allies in Congress and the Trump administration, amid concerns that U.S. manufacturers are losing business overseas to China. In May 2019, the Senate revived the agency by confirming Trump’s nominees to serve on the bank’s board.
In December 2019, Congress also reauthorized Exim for seven years, the longest extension in the agency’s 86-year history.
“I’ve never been a huge fan of government subsidies,” Kudlow said. But in this case, “I think national security and economic security and technological security has become a tough game, and China does not play by the rules.”
Kudlow criticized Beijing for deploying an array of policies such as industrial subsidies and forced technology transfer.
China’s unfair and trade-distorting government subsidies have become a major problem in the world trading system. In the past decade, state-subsidized Chinese companies have taken the lead in many key industries, creating unfair competition for U.S. firms.
The financial scale of China’s state subsidies is unknown, as is the extent of the spillover costs for the U.S. and global economy, according to experts.
Exim launched a China program this year to help level the playing field for U.S. exporters. The program sets a goal of reserving 20 percent of Exim’s financing authority to support U.S. businesses that compete directly with exports from China.
Exim also has stepped up its finance programs this year to help U.S. exporters hit by the slowdown in global trade caused by the pandemic.