Mexico President Pena Nieto may be wishing he hadn’t canceled that meeting with President Trump so hastily and soon be calling to reschedule. It appears that a means of wall financing is now becoming more likely and favorable, one that President Trump can impose unilaterally upon Mexico, a border tax. Nieto is mistaken if he believes abandoning the discussions will allow him to avoid paying for the border wall. He’s merely given up his opportunity to have a voice in how the payment is extracted. Now he’s left with a method being imposed upon him, like it or not, by the Trump administration.
White House press secretary Sean Spicer told reporters aboard Air Force One on Thursday that President Trump has made the decision and discussed it with congressional leaders. Spicer said, “When you look at the plan that’s taking shape now, using comprehensive tax reform as a means to tax imports from countries that we have a trade deficit from, like Mexico.”
He continued, “If you tax that $50 billion at 20 percent of imports – which is by the way a practice that 160 other countries do – right now our country’s policy is to tax exports and let imports flow freely in, which is ridiculous. By doing it that 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.”
Mexico is America’s third-largest trading partner, with a combined $531 billion in trade annually. We import $295 in Mexican products per year and currently have a $58 million trade deficit. The Washington Examiner reported figures from the US Trade Representative that show in 2015, we imported $74 billion worth of automobiles, $63 in electrical machinery, $49 billion in machinery and $21 billion in agricultural products. Aside from the agricultural products many of the other imports are products that formerly were manufactured in America and could be again.
While there are considerations regarding commitments made in the World Trade Organization and NAFTA, which could complicate the imposition of a border tax, the issue is one that will inevitably have to be addressed at some point and one that the Trump team has surely studied to the most minute level. If they make the statement that it is a possible course of action, we should be confident that they’ve already determined it is possible.
Mr. Spicer told reporters the import tax would ensure American taxpayers are “wholly respected.” While a portion of a tax would likely be passed on to American consumers through pricing, competition would likely impact their levels and benefit other nations that aren’t engaged in an invasion of America. It could also have the effect of making American made products more competitive.
Spicer noted that an import tax is a common means of generating revenue around the globe, saying, “This gets us in line, frankly, with the policies that the other countries around the world treat our products.” It also offers Pena Nieto a way out. He can stick to his guns about respect and not paying for the wall for his domestic audience as his industries write their checks to cover our construction costs. The reality is that the negotiations for the method of payment are underway, taking place in the media, right in front of us. Canceling the meeting played a part for both leaders.
Maybe, while we’re at it, Mexico should be helping us pay for their citizens’ medical costs, welfare and food stamps too. Maybe a Homeland Security surcharge to cover the cost of repatriating, housing and feeding their citizens would also be a good idea. He did say “comprehensive tax reform,” after all. Why stop after addressing just part of the problem?
Please like Rick on Facebook at https://www.facebook.com/RickRWells/ and on my website http://RickWells.US – Please SUBSCRIBE in the right sidebar I’m also at Stop The Takeover, https://www.facebook.com/StopTheTakeover/ and please follow on Twitter @RickRWells.