My head is spinning trying to keep track of what is real and what is just rhetoric. Here is more from Trump's press secretary:
It was not clear exactly how the Trump administration would impose the new tax on Mexican exports. But Spicer said it would be part of a broader plan to tax imports from countries with which the United States has a trade deficit, like Mexico.
“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,” Spicer told reporters. “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.”
Obviously, 160 other countries are not imposing a 20 percent tax on imports. Some of them are imposing a general VAT, and this applies to domestic products and imports. But that's very different.
So what exactly is being talked about here? Would the Trump administration really impose a 20% tax on Mexican imports? That would start an old-fashioned trade war and U.S. participation in the trading system could unravel. Or is this just rhetoric and negotiation, and cooler, wiser heads will step in? Is this the U.S. tax reform that is under discussion? Suddenly I'm much more pessimistic about all of this.
UPDATE from the NY Times:
The White House on Thursday appeared to endorse a 20 percent tax on all imports to the United States, only to insist a few hours later that it was not endorsing the plan.
Congressional Republicans have proposed the import tax as part of a broader overhaul of corporate taxation, and Sean Spicer, the White House press secretary, told reporters that revenue from the tax would cover the cost of a wall on the United States-Mexico border.
Representative Kevin Brady, the Texas Republican who authored the plan, told Fox News Thursday afternoon that President Trump appeared to be on board with it after an appearance by Mr. Trump at a retreat for congressional Republicans in Philadelphia.
But later on Thursday, Mr. Spicer convened reporters again to say that the tax was just one option under consideration to pay for the wall. Reince Priebus, the president’s chief of staff, told NBC News that the proposal was just one in a “buffet” of options.
Here's my question: If the U.S. imposes a VAT-like tax, and says the money raised from taxing Mexican imports is paying for the border wall, could the Europeans say the money raised from taxing US imports with their VAT is being used to pay for socialized health care?
