President Donald Trump's administration is considering a plan to give incentives to US companies to relocate their operations back home after the disruptions caused by the coronavirus pandemic, his Economic Advisor Larry Kudlow said on Monday.
The incentives could take the form of a 100 per cent write-off of expenses on structures, equipment, R&D and intellectual property, he told reporters at the White House after a teleconference Trump had with leaders of the G7 countries.
"That would pay for the moving expenses of American companies based in China. Right there, that would pay for their moving expenses."
But Kudlow added that nothing was firm as yet and "I'm tossing it out as something we're thinking about. I'm not here to form - the President hasn't signed off on it. It's something worth thinking about".
US companies are facing disruptions because they are not able to get manufactured goods and parts from China, where manufacturing has been shut down. Such a programme could also affect countries other than China where US companies have located operations and also deal a blow to globalisation.
Wall Street plunged again Monday morning and despite one stop in trading the negative hovered around 9 per cent at noon despite the Federal Reserve cutting interest rates to nearly zero per cent on Sunday.
Asked if a global recession was around the corner, Kudlow avoided the "R" word and said: "We are going to be challenged, no question about it. We have a big challenge. I've been saying that and I'll continue to say it. I'm not going to label it one thing or another."
About Wall Street, he said: "This market decline's tough. Very tough." But he downplayed its effect, asserting: "My own view, right or wrong, better or worse, I've always advocated long-term investing for myself and my family and friends. To me, when you see these big dips, these big drops, they're buying opportunities if you're a long term investor."
He claimed that about $400 billion will be available in total relief through the different measures adopted by the administration and Congressional action. These include deferral of income tax payments, deferral of student loan interest and purchases of oil combined with the unpaid sick leave.
"I prefer to think of it as fiscal assistance," he said.
During the teleconference with the leaders of the G7 - a group of major western economies and Japan, Kudlow said: "The degree of cooperation and coordination was fantastic.
"They all want to do whatever it takes on the health side of solving the virus side and on the economic side."
Japan's Prime Minister Shinzo Abe "mentioned how much he wanted to hold the Olympics in Tokyo, this summer. He doesn't know if he can, but he would like to".