Sponsors
The bill reduces the cost of reshoring by allowing immediate deductions for relocation from China and funds that change with tariffs to limit budget impact, trading direct tax relief and potential job growth for fiscal risk, tariff-driven policy incentives, and extra compliance burdens for businesses.
Small businesses and U.S. firms that move inventory, equipment, or supplies from China to the U.S. can deduct those relocation costs in the year paid, lowering near-term taxable income and out-of-pocket tax bills while encouraging reshoring of operations.
Establishes a Treasury trust fund financed by tariffs on Chinese-made goods intended to cover the revenue loss from the new deduction, which could limit deficit impact and make the change closer to budget-neutral in practice.
By lowering the upfront cost of relocating supply-chain assets, the measure can accelerate domestic investment and potentially increase manufacturing activity and employment in states that attract relocations.
If tariff receipts are insufficient to cover the deduction's revenue loss, taxpayers could face higher taxes or reduced public services to close the gap.
Linking the trust fund to tariffs on Chinese goods creates an incentive structure that could push policymakers toward higher tariffs or expose funding to volatile trade flows, risking trade tensions and unstable budgeting.
New Treasury regulations restricting which relocation expenses are deductible will add administrative and compliance costs for businesses, disproportionately affecting smaller firms with limited tax-compliance resources.
Based on analysis of 2 sections of legislative text.
Allows U.S. businesses to deduct costs of moving inventory, equipment, and supplies from China to the U.S., with costs offset by a tariff-funded Treasury trust that transfers amounts equal to revenue loss.
Introduced January 16, 2025 by Mark E. Green · Last progress January 16, 2025
Creates a Treasury-run program that lets U.S. businesses deduct the costs of moving inventory, equipment, and supplies from China to the United States in the year those costs are paid, subject to Treasury rules. To offset the federal revenue loss from that new tax deduction, the bill establishes a Treasury trust fund funded by amounts equivalent to tariffs on goods made in China and directs transfers from that trust to the General Fund equal to the revenue reduction. The Secretary of the Treasury (or a delegate) must set up the deduction program and issue regulations to limit allowable expensing to business moving expenses, and must manage the trust fund and transfers on a schedule and in a manner consistent with tax-code timing rules.