By Stevie Rosignol-Cortez

An array of factors, especially tax laws, are driving U.S. companies overseas.

That's according to Pure Storage CEO Charlie Giancarlo, who told Barron's in a recent interview that businesses must move some of their operations or risk falling behind their peers.

"That is improving with some tariffs, not that that's the best way to do it, but it's helped somewhat," Giancarlo said.

According to Giancarlo, other legislation makes U.S. manufacturing difficult, too. "It's a set of different tax laws and labor laws and so forth that make manufacturing in the U.S. economically a competitive disadvantage," he said.

Pure Storage has a diverse manufacturing approach. The data storage company, which offers both hardware storage products and software for data management, has multiple overseas operations and outsourcers, according to Giancarlo.

"We're a global company from a manufacturing standpoint. We're very prominent in Southeast Asia, but also in Europe and in the U.S...We work very closely with a number of outsourcers, Foxconn among others," Giancarlo said.

According to its website, Pure Storage is used by roughly 60% of Fortune 500 companies, including Meta, Comcast, and NASA, along with 40% of U.S. federal agencies.

Pure Storage is not the only company with a close eye on the tax landscape. Companies are waiting to see if President-elect Donald Trump -- who was known for slashing taxes for businesses during his first term in the White House -- will pass tax proposals that boost conditions for domestic manufacturing.

A recent article by S&P Global points out some potential effects of Trump's tax proposals on businesses. "A lower corporate tax rate of 15%, when applicable for domestic production, would reduce a company's tax expense and boost the cash available to service debt, all else being equal," it said. "In addition, it could incentivize other companies to reduce their business activities overseas."

S&P Global notes its unclear how these changes will affect other aspects of the economy -- which could also affect companies' bottom lines. To find out whether the U.S. tax environment will change for good in the upcoming Trump administration, Pure Storage and other businesses must wait to see if new tariffs and trade changes take effect, too.

Write to Stevie at stevie.rosignol-cortez@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 17, 2024 01:00 ET (06:00 GMT)

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