Invest in the US or pay tariffs, says Trump in Davos address

He offers lowest taxes of any nation’ if businesses bring manufacturing to America

- Bhagyashree Garekar

The competition for foreign direct investment (FDI) around the world just got tougher.

After taking the reins of a country that is already the world's largest recipient of FDI, US President Donald Trump said he aims to bring home even more money.

Speaking to the world's top policymakers and business chiefs via a video call from the White House, Mr Trump offered lower taxes if they brought manufacturing to the US, and threatened to impose tariffs if they did not.

"My message to every business in the world is very simple," he said in his address to the World Economic Forum's (WEF) annual gathering in Davos, Switzerland, on Jan 23.

"Come make your product in America, and we will give you among the lowest taxes of any nation on earth.

"But if you don't make your product in America, which is your prerogative, then, very simply, you will have to pay a tariff - differing amounts, but a tariff - which will direct hundreds of billions of dollars and even trillions of dollars into our Treasury to strengthen our economy and pay down debt."

In 2023, the cumulative FDI in the US reached US$5.39 trillion (S$7.3 trillion), according to the US Bureau of Economic Analysis in its latest report of July 2024. The US national debt stands at around US$36 trillion.

About US$227 billion flowed into the country in 2023 through a mix of acquisitions, expansions and greenfield projects. The top investing countries were Japan, Canada and Germany. Singapore figures among the top 10 investors.

Most of the investment goes into manufacturing (41 per cent), with a sizeable amount in finance and insurance (Il per cent).

Mr Trump's tariff policy is yet to be fleshed out, but his initial proposals include levies of 25 per cent on Canada and Mexico, starting from Feb 1. He has also floated imposing an additional tariff of 10 per cent on Chinese imports.