US President- Elect Donald Trump vowed to impose "punitive" sanctions against companies that have been taking manufacturing jobs overseas by hiking as much as 35% in taxes for products sold in America.
Trump took to social media to warn companies to not make a "very expensive mistake" by saying that the sanctions in the form of tax hikes may be imposed on companies that took their business abroad and fired American workers.
"There will be a tax on our soon to be strong border of 35% for these companies wanting to sell their product, cars, A.C. units etc., back across the border. This tax will make leaving financially difficult, but these companies are able to move between all 50 states, with no tax or tariff being charged, " Trump tweeted.
This is part of Trump's campaign promise to return blue-collar jobs back into the US mainland. He also assured companies of tax cuts if they should agree to return their businesses onshore and hire American workers instead.
Just last week, Trump tweeted his warning to Rexnord of Indiana for outsourcing operations by letting go of 300 workers and moving their operations over to Mexico. Rexnord is a Milwaukee-based industrial supplier and plans to relocate a bearings plant in Mexico.
Legal analysts, however, predict that these tax hikes could face legal impediments, particularly since tariff restrictions or changes for specific companies need congressional approval before it can be imposed. Economists also agree that this may be a tough move for Trump in case this goes to the courts to face legal challenges.
Earlier, Trump has promised a $7 million tax break package in over 10 years for American air-conditioning giant Carrier Corporation after shelving part of its plans to outsource some of its manufacturing and research operations in Mexico.
Trump's plan to cut tax rates for companies opting to stay their businesses onshore is believed to be the biggest tax cuts ever since the Ronal Reagan administration. These plans include across-the-board reductions like making only three tax brackets instead of the standard seven. Other tax reform measures also include cutting down corporate taxes, increase standard deductions for individual taxpayers and removing the estate tax.
Financial analysts are predicting that the bottom quarter income earner would get to see an increase in their earnings by 1.9 percent, while the top 1 percent earners my see revenues increase in double digits.
Trump promised to provide no less than 25 million jobs in 10 years and that the manufacturing industries have a big role to play in giving jobs back to Americans, rather than having them moved abroad.