Trump's Mexican wall tax could hurt US growers
White House spokesman, Sean Spicer, today told reporters on Air Force One that Trump is considering the tariff to pay for the wall and has consulted with leaders in Congress about it. He said the plan could involve comprehensive tax reform as a way to tax imports from countries like Mexico, with which the U.S. has a trade deficit. He said this is a common practice among about 160 countries. Trump puts the trade deficit with Mexico at $60 billion.
“Right now our country's policy is to tax exports and let imports flow freely in, which is ridiculous,” Spicer said “By doing it that way (taxing the trade imbalance at 20 percent or so) we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That's really going to provide the funding.”
Virtually all agricultural trade with Mexico is tariff-free because of the North American Free Trade Agreement and that's the way U.S. farmers and exporters want to see it remain, according to industry representatives. Trump, however, has called for the pact to be renegotiated.
The plan Trump described is basically the so-called “border adjustable” corporate tax that is a critical part of the House GOP tax plan. It would apply the tax to the value of imported products, but not to U.S. exports. Supporters of the tax argue that it's essentially the same as VAT, or value added tax, which many other countries have.
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