How Offshoring and Global Supply Chains Enhance the US Economy

The 2016 US presidential election campaign has rekindled the debate over offshoring—locating business operations and jobs overseas—by US-based multinational corporations (MNCs). Some presidential candidates have assailed investments abroad by US-based MNCs as damaging to economic growth and jobs at home. They have proposed imposing a higher tax on US companies that engage in offshoring and outsourcing. These proposals will not not bring back the lost jobs and plants. Instead they would disrupt global supply chains that link the US economy to the rest of the world and are crucial for US exports and US employment, ultimately harming US competitiveness worldwide and threatening existing jobs. In addition, protectionist efforts to impede trade will likely trigger a backlash from trading partners.