This is the Cato Daily Podcast for Wednesday, January 11th, 2017. I'm Caleb Brown.

Large multinational companies spend a great deal of time and energy discovering where to locate production facilities, labor costs, taxes, tariffs,

and regulations all play a role.

Cato Institute Trade Policy analyst Dan Pearson comments on how trade gets done and what the new Trump

administration should focus on. When a firm is deciding where it's going to

continue its operations or whether it's deciding well well, should I really stay in this country or

should I move somewhere else? What are some of the key factors that companies use to make that

kind of decision?

This is not such an issue for businesses that just manufacture in the United

States because most of them will stay here and if there's a competitive pressure they do as well

as they can for as long as they can, but the real challenge comes from multinational firms that already

operate in multiple countries,

because they have a very good understanding of what the costs and benefits are of manufacturing

in these different locations.

So when you have a U.S. firm like carrier that manufactures in multiple countries, at least in the United States and Mexico at this

point, they know what it would mean to shift production out of Indianapolis down to Mexico and there can be a number of

reasons for that.

All right, so for a company that decides, well, we're just going to move this new plant

or we're going to open a new plant in Mexico

versus Canada or the United States.

What are some of the key factors that would lead them to make that particular decision?

Certainly the labor cost is a potential factor.

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