Question

Foreign companies may establish plants in the United States to avoid import duties imposed on products entering the United States from their home countries. True or false?

Answer 1

True

Step-by-step explanation:

However, they will have to pay company income tax and other taxes in the US.

Also, if they import raw materials into the US from their home country or any other country, they would still be subject to import duties except the US government has a favorable tariff policy that exempts the payment of import duties on certain imported products.

Asides from import duties, there are many other factors to be considered before deciding to set up a company in the international economy. Sometimes, paying the import duties may be cost effective and more efficient for the company than setting up a subsidiary in the US.