Making US companies move production back home could backfire

As a student who will be entering the workforce soon, I have a few concerns about some of United States President-elect Donald Trump's election campaign promises.

Mr Trump has said that he plans to take the US out of the Trans-Pacific Partnership - to which Singapore is a signatory - as well as impose heavy taxes on US companies which wish to produce their goods in other countries, in order to bring jobs back to America ("PM disappointed TPP unlikely to be passed"; Nov 15, and "Policies Trump has said he might execute"; Nov 10).

By producing goods domestically, US companies will be subjected to the minimum wage scheme as well as limited land resources. Production costs will be much higher than before.

To ensure that they can still earn a profit, there is a chance that popular US brands, such as Nike and Apple, will increase the prices of their goods.

In turn, consumers may be less likely to purchase such goods, resulting in a lower amount of revenue for the companies.

Other than an increase in production costs, Mr Trump has mentioned that he will heavily tax US companies which hire immigrants.

Hence, most companies would rather not have offshore offices in other countries, so as to save costs.

Such a move will leave Singaporeans with a possible lack of employment opportunities in multinational corporations.

While one can understand the US companies' stand on their employment and production issues, it will not be a wise decision for them to take such risky moves just to ensure that they earn a profit.

Such companies, which have loyal customer bases, should carry on production as normal. By maintaining the current price, the companies will benefit in the long run, as consumers will continue to patronise them.

Cleon Ong Jin Khai