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Yahoo
4 days ago
- Business
- Yahoo
How the latest US tax bill increases uncertainty for foreign businesses
The US' latest tax bill, officially named the One Big Beautiful Bill Act, contains a section that could drastically change the business environment for foreign companies and investors in the US. Section 899 says that the US could increase taxes on foreign investments (such as subsidiaries from non-US multinationals) if these come from countries that the US deems to have unfair trade policies. House Ways and Means Committee chair and Missouri Representative Jason Smith told Axios: 'This is a way to help put them in check, so that they understand that if they do that to our businesses, there will be consequences for their actions. Hopefully it will never take effect.' Under this provision, foreign companies operating in the US, US companies with foreign owners, multinationals and individual foreign investors from "discriminatory foreign countries" could face higher US taxes. This would enable the government to retaliate against countries that have imposed digital services taxes (DSTs) on US tech companies by targeting foreign investments from these countries in the US. It comes a few months after US Vice-President JD Vance visited France for the AI Summit, where he warned Europe against increasing tech regulations. US President Donald Trump has also criticised antitrust and privacy cases being pursued by the EU against big tech companies. Already, the US' dizzying tariff regime was hurting foreign investor confidence in the US. Delegates at the SelectUSA Investment Summit told Investment Monitor that many foreign businesses were delaying plans until they could have a more certain outlook. 'The measure risks detonating investor confidence and could set off a damaging pullback of foreign capital just as the US needs it the most,' Nigel Green, deVere Group's CEO, tells Investment Monitor in a note. 'It punishes the very people whose capital keeps American businesses growing, whose investments fund US debt and whose companies are employing millions of US workers.' 'Other countries won't sit idle while their firms and funds are penalised. They will respond. This means potential tax retaliation, trade frictions and further fragmentation of an already fragile global economic order,' Green says. He also emphasised that US workers would suffer the most severe consequences from this law if it came into effect. Ashley Akin, a tax consultant at RKO Tax and former KPMG manager, tells Investment Monitor over email that this provision 'introduces a real pricing risk for foreign investors and multinational firms'. 'If a country enforces digital taxes that the US finds discriminatory, their businesses operating in the US can face extra taxes starting at 5%, climbing up to 20%. These surcharges can override tax treaties,' Akin outlines. 'Companies doing everything by the book could still get hit, purely because of the tax policy in their home country." Already, the Trump administration has suggested that countries regulating US tech companies abroad could provoke more tariffs. These threats were seemingly aimed at Europe, where regulators have begun cracking down on major tech companies for what they view as privacy breaches and anti-competitive behaviour. Trump's senior trade adviser, Peter Navarro, has accused the EU of using "lawfare [...] to target America's largest tech firms". 'Section 899 is designed to protect US tech giants from what Washington views as targeted digital taxes. It gives the US leverage to push back against European digital services taxes, and it can help these companies negotiate better terms abroad,' Akin says. There is, she adds, a risk of backlash. 'If European countries respond with their own countermeasures, we could see a patchwork of retaliatory rules. That would just create more friction for everyone, not just tech. It is not a clean win [for US tech companies], but it does shift the power dynamic back towards the US,' she notes. The One Big Beautiful Bill passed in the House with 215 votes for and 214 against. Two Republicans joined Democrats in opposing it. It will now be debated in the Senate, where officials will have the opportunity to amend provisions. "How the latest US tax bill increases uncertainty for foreign businesses" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
30-05-2025
- Business
- Yahoo
Can the US create high-tech manufacturing jobs?
It is hard to imagine exactly how we will know who won the AI arms race. We would need a global consensus about what AI that supersedes human-level intelligence (commonly referred to as artificial general intelligence) looks like, a benchmark that is much harder to pin down than a picture of Neil Armstrong on the moon. Whatever the case, industry and government officials at the SelectUSA Investment Summit agreed: the US wants, needs, to be first. A crucial part of winning the AI race in the US involves creating a high-tech manufacturing industry that will build the thousands of chips and data centres needed to power this technology. The creation of such an industry is aligned with one of the Trump administration's main goals: bringing manufacturing jobs back to the US. However, delegates at the SelectUSA Investment Summit made it clear that this was not an easy task and that the lack of a trained labour force is one of the main obstacles they face. How will the US address its skilled labour shortfall in order to power its AI ambitions? Since 1997, 'the US lost around five million manufacturing jobs', US Labor Secretary Lori Chavez-DeRemer told an audience at the summit. 'Nearly 100,000 factories closed, and we experienced one of the largest drops in manufacturing employment in history.' However, that was all about to change, Chavez said. 'From manufacturing to mining and technology to transportation, our industries are coming back to life because President Trump has sent a clear message: America is open for business.' Much of President Trump's tariff regime, despite the actual consequences it has had so far, has been justified through this goal. Manufacturing jobs left the US when the world embraced globalisation, and the president argues that high tariffs will force companies to build locally, and therefore bring those jobs back to the US. For this, he has received support from unlikely allies such as United Auto Workers President Shawn Fain and the Brotherhood of Teamsters (one of the US' biggest unions). At SelectUSA, state governors from both parties and industry leaders also made it clear that they supported increasing manufacturing with AI integration at its core. Siemens CEO Barbara Humpton said the technological advances in manufacturing reflected an "AI industrial revolution". "There are still old notions of what manufacturing looks like. That it is hot and hard and dirty work, but it is cutting-edge technology," Michigan Governor Gretchen Whitmer said about her state, traditionally the home of US auto manufacturing. There are various objectives at play. There is the political goal of bringing back manufacturing and the industry goal of making these processes more efficient through AI integration. Underpinning both of these is the need to develop a high-tech manufacturing sector that can sustain it all. Developing sensitive technology independently from China seems to be a national security issue everyone can get behind. Since 2020, the US has attracted more than $540bn in semiconductor supply chain investments. The CHIPS and Science Act, passed in 2022, has been a major factor for domestic and foreign companies giving grants, subsidies and other incentives to develop the sector. The CHIPS Act is the first major piece of industrial policy the US has passed since the 1950s. It is a notable effort in a country that is not accustomed to long-term planning. However, it means that the US is catching up with other countries that have spent decades developing a workforce with the necessary skills. Taiwanese companies such as TSMC have been a major source of investment since the passing of the CHIPS Act; the company says its total investment in the US will reach $165bn (T$4.93trn). Even with this policy, however, the US may not necessarily have been an economically logical place for it to build semiconductors. The security guarantee that the US provides for Taiwan also played a role in attracting companies that might have otherwise produced more locally. 'I am not sure that purely on the economics, the US would be a very good bet, even with incentives for building leading-edge fab custody, mostly because of the workforce. We just don't have a tradition of this highly consequential workforce that you really need for the most advanced chip manufacturing,' W. Patrick Wilson, vice-president of government relations at Taiwanese chip company MediaTek, told Investment Monitor. 'We always understood that another component of it was deepening the US-Taiwan partnership.' Whatever the confluence of factors that has led to vast investment in the semiconductor industry, it has meant that foreign companies are now taking on the challenge of building the necessary workforce. The Semiconductor Industry Association predicts a deficit of 67,000 workers within the country's semiconductor industry by 2030. According to GlobalData Strategic Intelligence principal analyst Isabel Al-Dhahir, this gap "is likely to affect not just domestic chip production but also adjacent industries such as data centre construction, potentially resulting in delays and escalating costs'. At the SelectUSA summit, the need for the US to upskill workers was widely acknowledged by both economic development organisations and businesses with major investments in the US. One official who is part of the Tech Hubs Programme, highlighted that in her city, they "put industry in the room first" and asked them "what are your needs for your workforce today? What are they tomorrow?" These conversations happen before they contact technical colleges to work together to develop curricula. Representatives from US and Taiwanese semiconductor companies also expressed frustrations about the skilled labour shortage, particularly as the rise of automation changes the qualifications workers need. 'The area that we really focus on for workforce development is that mid tier. Ours will be the most advanced silicon wafer facility in the world, which means that we are implementing a lot of automation. So, we will have fewer operators. Operators typically have a high school-dependent education, but we will need more technicians with that community college, two-year degree,' said Brent Omhdal, executive vice-president for government affairs at Taiwanese chip company GlobalWafers. While companies are betting that educational initiatives led by private-public partnerships will create this workforce in the long run, their time horizons do not always conform to the speed the industry wants to move at. TSMC, which announced in March that it would invest an extra $100bn to build five more fabs in the US, has already dealt with the consequences of this asymmetry. As of January 2025, half of the 2,200 workers at TSMC's Arizona plant had been brought in from Taiwan. The company realised they could not stay within budget and train a local workforce with the necessary skills on time. This caused pushback from unions, who were promised the plant would create jobs for local workers. The example underscores the difficulties of supercharging the development of an industry without a readily available workforce to match it. Barry Broome, Greater Sacramento Economic Council CEO, says he witnessed 'the destruction of the economic base of the Midwest', while working in Ohio and Michigan earlier in his career. The problem was not free trade agreements like NAFTA, he argues, it was that 'there wasn't an effort to increase US competitiveness'. When Investment Monitor asked whether the simultaneous push to reshore jobs while integrating AI and automation will bring back as many jobs as some people expect, Broome said: 'It won't.' 'I think it will bring back a lot of jobs. I mean, the fact of the matter is, we need a nationwide movement to upskill people, because you are not going to make a living wage unless you are technically skilled,' Broome noted. Increased automation, while it might contribute to the growth of the industry and lower costs, would also undermine the goal of job creation. 'Trump's goals are reshoring and increasing employment in the manufacturing industry," Beatriz Valle, senior technology analyst at GlobalData, tells Investment Monitor. "Trump is cultivating ties with many Big Tech CEOs whose main goal is to grow automation and robotics, which, in some cases, may replace types of manual work, and there is a clear contradiction between these two goals." Wider economic questions also underpin the development of this workforce. Will companies invest more in automation to counteract higher operating costs in the US? What does that mean, in the long term, for the number of jobs that will be created? And, more importantly, will the US be able to pursue all these goals with enough speed to win the global AI race? "Can the US create high-tech manufacturing jobs?" was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Yahoo
21-05-2025
- Business
- Yahoo
Uncertainty: worse than tariffs, better than decoupling
Last week, over 5,000 delegates gathered in a sprawling convention centre just outside Washington DC to answer one question: is the US still the most attractive foreign direct investment (FDI) destination in the world? The SelectUSA Investment Summit, established in 2007, is the US's most important event to promote FDI. It gathers international businesses, industry leaders, economic development organisations and representatives from all US states. This year's event, however, took place against the backdrop of a US-initiated trade war. Many versions of the US's current FDI standing emerged during the few days Investment Monitor was present at the event, but one thing was clear: the uncertainty brought on by tariffs is causing many businesses to pause, delay and hope for the best while some multinationals with long-term horizons double down. The plenary sessions that featured industry leaders and government representatives mainly focused on the positive and were mostly attended by country delegations. They discussed US President Donald Trump's America's First Investment Policy and pressed the suggestions that now is the 'perfect time to be investing in the US' (Barbara Humpton, CEO of Siemens Corporation) and that 'there's never been a better time to select the US than now' (Ola Källenius, Mercedes-Benz Group CEO). Mercedes-Benz has increased production of some models in the US to counter the tariffs. One of the very few statements on the main stage that alluded to the tariff mayhem of the past few months came from Michigan Governor Gretchen Whitmer, who acknowledged that 'trade policy is creating a lot of stress in industries all across our economies.' When a moderator asked Hyundai CEO José Muñoz whether his company has increased production in the US because of tariffs (the 'elephant in the room', the moderator called them), Muñoz gave a long answer about how his industry's time horizons are so long they do not make decisions based on 'incentives that come and go.' Some of Hyundai's moves, such as starting a tariff task force in April and shifting some of its production to the US from Mexico, suggest a different reality to Muñoz's unfazed answer. The rest of the Summit (except some smaller panels) took place downstairs, in the exhibition hall, where investment promotion agencies and other organisations from across the US had their own booths. Here, for the majority of people that Investment Monitor spoke to, there was no downplaying the difficulties that businesses are facing, given the rapid changes to trade policy. While many are still eager to engage with the US market, many feel the need for some level of predictability before fully committing. European American Chamber of Commerce executive director Fernanda Ceva, who had recently been in Germany conferring with companies interested in investing in the US, said: 'The impression that we have is that everyone is holding up to decide something until they have more certainty. I see that they're still interested in doing business with the US.' According to a poll of 6,000 German companies conducted by the German Chamber of Commerce and Industry, only 19% of firms in Germany are planning to expand to the US. German investments in the US account for 12% of the country's foreign investment. Yvonne Bendinger-Rothschild, the executive director of the European American Chamber of Commerce New York, said: 'The problem is more the uncertainty than the tariff itself [...] We're constantly going back and forth. If we saw there's going to be a 10% tariff, then people can plan with it to do something and make forecasts [...] If you think about it, that we have earnings reports that don't have a forecast in them, I mean, that turns every economist's stomach.' Christopher Chung, the CEO of the Economic Development Partnership of North Carolina, echoed this sentiment. 'What we are hearing at this event is largely around, just tell us what the rules of the game are going to be and assure us that these are the rules that will be in place for a while, and they're not going to change in two or three years, because that makes it really hard for these companies,' he said. 'That kind of back and forth [...] creates a little too much uncertainty, and that makes it hard for [companies] to push ahead with their decision.' Hours before the second day of the summit began, the first day when media would be allowed in, the US and China reached a major milestone in trade negotiations when they announced a tariff pause. The US would reduce its 145% tariff on Chinese goods to 30%, and China would reduce its 125% tariff to 10% for 90 days. The pause was a welcome development for everyone, as it seems to signal that the pace of change is slowing down. Oklahoma Governor Kevin Stitt suggested it would 'give them the time to really sit down and have cooler heads prevail.' But others highlighted that the pause was just that, a pause. 'You're seeing a little bit more certainty now that there's going to be negotiations, but again, it's a pause,' said Ed Brzytwa, vice president of International Trade at the Consumer Technology Association and a former official of the US Trade Representative's Office. 'The President himself confirmed that at the end of the 90 days, if China doesn't cut a much more substantive deal, that the tariffs could come back on, maybe not all the way to 145% but certainly not as low as 30%.' While some importers or inventors have stopped or delayed plans, businesses have also been trying to circumvent trade barriers through other means. The demand for bonded warehouses in the US, buildings where imports can be kept before payment of a duty, has surged since the tariff uncertainty began. Goods can be stored in bonded warehouses for up to five years. Shifting global supply chains, once seen as the best method to avoid being affected by US hostilities with China, has become a tougher path. 'Companies have been trying to reposition their supply chains out of China, but they're facing tariffs of 46% in Vietnam, 32% in Taiwan and similarly high tariffs in Thailand, Japan and South Korea,' Brzytwa noted. 'So, they're being penalised for making the right decision.' Whatever happens with the tariffs, the interdependence of the global economy with the US means decoupling is not an option. This dependence fares well for the North American country, because firms would rather wait out this period of uncertainty than leave the US and try to replace it with another market (an impossible task given that the US is the world's largest consumer market). The same cannot be said for companies that are caught in a waiting game with no end in sight. 'Europe and the US are each other's biggest trading partners, and no tariff is going to change that,' Bendinger-Rothschild explained. 'What the tariffs are going to change is how we're going to go about doing business with one another, but we're not going to stop. You can't replace either Europe for a US company or the US as a European. [Companies] have confidence in the economy, because the moment we have the most faint of good news, the market is shooting up.' The cautious approach foreign firms are taking, even as tariff pauses have been put in place, shows the implications of the US's loss of credibility on global business decisions. While the 90 day pause with China has just begun, we are already a third of the way through the other 90-day tariff pause – the one that began a week after universal reciprocal tariffs were announced in April. This break is set to last until July, prompting countries to rush to make concessions and deals with the US. The deals being made during this period, however, are not true trade deals, according to Rothschild-Bendinger. 'A trade agreement is a comprehensive agreement where you have everybody give a little, take a little,' she highlighted. 'A trade agreement is not selling somebody more soybeans.' Given the uncertainty around what the tariffs will look like at the end of the pause, some officials this publication spoke to said their companies are accounting for that uncertainty by factoring a base tariff rate into their projections. Huynh Thien Phu, business development specialist at Vietnam-based coconut water supplier Betrimex, said his firm is 'accepting [...] that it's going to be around 10-15%. If it's around 10%, let's say 11%, then it's okay. We already pay five. Adding another five wouldn't hurt us as much; we can adapt to it. But, hopefully it's not high, in the 40s.' Vietnam was hit with one of the highest tariff rates in April, at 46% and is currently in trade talks with the US. Brent Omhdal, executive vice president for government affairs at Taiwanese semiconductor firm GlobalWafers, commented: 'If you believe the news reports, the new normal is 10% tariffs, so I think businesses, including our industry, are adjusting.' Even the US's development of the artificial intelligence (AI) industry, which was heavily touted by speakers during the plenary sessions, could be slowed down by the tariffs because of the uncertainty around the price of inputs. On tariffs affecting semiconductors, Omhdal said of GlobalWafers: 'Being the only manufacturer of silicon here in the US at 300mm, you could benefit from the tariff in that way. At the same time, we need to actually import some substrates, even from our own company.' A few days after the conference, GlobalWafers announced a $4bn expansion in the US. The semiconductor industry is also facing uncertainty from an ongoing government probe. In April, the Trump administration initiated an investigation into semiconductors under Section 232, which enables the president to restrict imports that threaten national security. 'With these investigations, they could impose a tariff of 25% or more [...] on the finished good that has a semiconductor in it,' Brzytwa explained. 'Technology products have many different types of inputs [...] If there's a tariff on the semiconductor or the printed circuit board or let's just say the glass casing, it makes it much more difficult and expensive to manufacture that product in the US.' Companies have long been interested in investing in the US. And, despite the uncertainty, they still are. But given the events of the past few months, the ability to confidently predict the economic conditions under which that investment might happen has practically disappeared. Most firms can do is stay agile, vigilant and ready to change course. Christopher Chung told Investment Monitor about his meeting with the North American CEO of a big aerospace company. 'We were talking afterwards, and he turned to his communications person, and basically his question was, have we heard anything from the White House in the past 30 minutes? He didn't say it as a joke.' "Uncertainty: worse than tariffs, better than decoupling " was originally created and published by Investment Monitor, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Time of India
19-05-2025
- Business
- Time of India
IIT-K's SIIC joins hands with US centre to drive global access for startups
Lucknow: Equipping companies from India with the tools, knowledge and networks necessary to successfully expand operations in the US market, the Startup Incubation and Innovation Centre (SIIC) at IIT-Kanpur has been named as a key partner in the establishment of NMexus , a first-of-its-kind global business accelerator and commercialisation centre based in Albuquerque, New Mexico. The initiative was officially unveiled by New Mexico governor Michelle Lujan Grisham at the SelectUSA Investment Summit in Maryland, just outside of Washington, DC, this week. Its primary goal is to attract foreign direct investment and assist international companies from India, the Middle East, Europe and Asia in establishing a strong presence in the US market. The announcement cements New Mexico's reputation as a global science and technology hub, attracting foreign direct investment (FDI). With companies from India joining the state's innovation landscape, India becomes the 15th foreign country to invest in New Mexico, further enhancing the state's global appeal. According to reports, the NMexus Centre in Albuquerque's Mesa del Sol innovation district has welcomed its first cohort of companies, featuring a diverse mix of businesses from India and Oman. The participating companies include Zonap Engineering India, Alligator Automations, DCirrus Inc, Supreme Technology, American Grain Corporation, Oliver Merino LLC, and Ardic, marking a significant step in the growth of the region's innovation ecosystem. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Villas For Sale in Dubai Might Surprise You Villas in Dubai | Search Ads Get Info Undo The centre is expected to serve up to 40 companies annually, generating approximately 1,500 new jobs and an economic impact of over USD 400 million in the next five years. "The NMexus Centre signals to the world that New Mexico is open for business," Governor Grisham said. SIIC at IIT-K had signed an MoU with NMexus Centre in April 2025 to support Indian startups entering the US market. It will provide NMexus with access to a curated pipeline of high-quality, market-ready startups. In return, startups incubated at SIIC will benefit from NMexus' soft-landing infrastructure, mentoring, regulatory support, and business development services tailored for the North American market. Professor-in-charge, SIIC, IIT-K, Prof Deepu Philip said, "This partnership will allow our innovators to access international markets more seamlessly and help position Indian technology on the world stage." CEO, SIIC, Anurag Singh said, "Through NMexus, we are building a bridge between Indian innovation and the US opportunity. This collaboration opens new doors for our startups — offering the critical infrastructure and support needed to scale globally and sustainably." SIIC at IIT-K is one of India's oldest and most active incubators. With a focus on deep-tech innovation, SIIC provides a dynamic startup ecosystem through funding, mentorship, and strategic partnerships — both in India and globally.
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Nikkei Asia
16-05-2025
- Business
- Nikkei Asia
Trump tariffs keep Asian firms on sidelines at US investment summit
PAK YIU NATIONAL HARBOR, Maryland -- Asian companies hesitate to invest in the U.S. amid the uncertainty shaped by the Trump administration's whipsawing trade policies, a reality ironically highlighted at an investment event here this week. "Invest now and invest big," U.S. President Donald Trump urged foreign companies in prerecorded remarks to the SelectUSA Investment Summit, a premier event of the Department of Commerce.
