American manufacturing, facing challenges like high borrowing costs and a strong dollar, is witnessing a potential turnaround with significant investments in factory construction. These investments are mainly propelled by subsidies from the Biden administration aimed at boosting semiconductor production and renewable energy equipment. However, the second category of subsidies faces threats from political opponents who wish to cut low-carbon energy support, which could undermine incentives for onshore manufacturing. The dynamics of supply and demand incentivized companies to consider where to establish or expand manufacturing facilities.
If it ends up that the timeline for these credits is shortened, then the incentives to develop an onshore manufacturing facility obviously go down.
The Biden administration's strategy relied on a push and a pull. First, push the supply of clean energy products through tax breaks, loans and direct grants to manufacturers.
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