There’s been a growing push among U.S. lawmakers to stimulate the nation’s economy and create more jobs. This has spurred the creation of the American Manufacturing Competitiveness Act, which is currently being considered by Congress. So, what is the American Manufacturing Competitiveness Act and how will impact the economy?
In short, the American Manufacturing Competitiveness Act would allow for small, temporary reductions in tariff prices by up to half a million dollars for three years on imports that are not produced here in the U.S. In 2015 alone, 45% of all imports were classified as “intermediate goods,” including aircraft parts, fuel, precious metals and more. The U.S. relies on these imports to stimulate the global marketplace while creating new American jobs in the process. When tariff prices increase, it discourages companies from importing these goods — goods that are actually used to create new jobs here in the U.S.
As noted by Kevin Brady, the American Manufacturing Competitiveness Act would allow the House to consider new tax cuts that would essentially create more jobs. Manufacturers can then lower their operating costs, create more jobs, and increase production.
“Our bill will create an effective process for the House to consider manufacturing tax cuts that will help our job creators compete in the global market. Under the new process, our manufacturers will regain their competitive edge over manufacturers from other countries. Soon, it will be easier for our manufacturers to lower costs, create new jobs, increase U.S. production, reduce prices, and help grow our economy,” explained Kevin Brady (R–TX), Chairman of the House Ways and Means Committee.
This makes sense if you think about it: forcing companies to pay exuberant amounts on tariffs just to import essential “intermediate” goods will only discourage them from acquiring these goods. In turn, this restricts their output, reducing the amount of products they can produce and export. The American Manufacturing Competitiveness Act has been widely accepted among lawmakers and is expected to pass Congress.
Of course, the concept of cutting tariffs isn’t a new idea by any means. China hasn’t imposed tariffs on intermediate goods used in the production of its exportable products for years. Canada has also embraced this principle by eliminating tariffs on industrial products.
What do you think of the American Manufacturing Competitiveness Act?