The U.S. Senate is set to vote on a final tax reform bill by Friday, and the financial world is awaiting with anticipation. However, it is not just Wall Street that is excited about the possibility for a 15% cut in corporate taxes, among other reforms. The manufacturing sectors has also thrown its support behind tax reform.
The Trump administration has made tax reform its main legislative drive after it previously failed to repeal the Affordable Care Act. However, the administration also has bold ambitions to grow what it views is a “gutted” U.S. manufacturing sectors. The McKinsey Global Institute released a report in which it projected reforms could add over $500 billion to U.S. GDP.
Some of the reforms recommended in the report included utilizing new technology and design tools, as well as a focus on customization rather than on mass production. The report suggested a greater commitment to factory streamlining and automation, suggesting that U.S. manufacturing could see its footprint expand by 20% or more by next decade if reforms were implemented.
Investors who want to bet on the resurgence of the U.S. manufacturing sector should consider the iShares US Industrial ETF (NYSE:IYJ). The ETF was up 1.55% in early afternoon trading on November 30. Some of its top holdings include General Electric Co., Boeing Co., and Union Pacific Corp. It has climbed 19.3% in 2017.
If tax reform is passed before 2018, look for infrastructure and manufacturing to be the next big focus of the Trump administration.