Lawmakers in Congress scrambled Thursday to try to make sense of news that President Donald Trump wants to use a 20 percent tax on goods imported from Mexico to pay for the cost of constructing wall on the Southern border.
“We’re working on a tax reform bill that will reduce our trade deficits, increase American exports and will generate revenue from Mexico that will pay for the wall if we decide to go that route,” Trump announced at a GOP policy retreat in Philadelphia.
Cheers immediately rang out from House Republicans because it seemed like Trump was referring to their idea to tax all imports at a rate of 20 percent and exempt exports from tax entirely. Trump seemed to dismiss that same plan, known as “border adjustment,” earlier this month when he told the Wall Street Journal that the idea was “too complicated.”
Such a stunning change in tax policy would need buy-in from a wide range of lawmakers on the Capitol Hill, most of whom spent Thursday just trying to figure out what exactly Trump wants the tax policy to include.
House Republican leaders and their staff rushed to say that it was clear Trump was embracing their entire border adjustment idea.
“We have been and continue to be on the same page about tax reform that supports American jobs and American goods,” said AshLee Strong, a spokeswoman for House Speaker Paul D. Ryan (R-Wis).
Members of the tax-writing House Ways and Means Committee insisted Trump was on their side.
“What he’s referring to is border adjustment,”said Rep. Devin Nunes (R-Calif.), a senior member on Ways and Means.
Then things got complicated. White House spokesman Sean Spicer told reporters traveling back to Washington from Philadelphia that Trump supports using the tax to raise around $10 billion per year to offset the cost of building a wall with Mexico. He didn’t mention the rest of the border adjustment plan.
“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,” Spicer said.
That all changed later when Spicer said the idea was just one of many options on the table.
“The idea is to show that generating revenue for the wall is not as difficult as some might have suggested,” Spicer later told reporters. “The idea today wasn’t rolling it out or being prescriptive or announce anything, it’s to say hey look, it’s not that hard to do.”
Several GOP aides said they were confused because Trump’s statement was so vague. Most declined to comment on the proposal because they simply didn’t know if Trump was advocating for a tariff on goods from Mexico or if he supports the House GOP idea.
The system of taxing all imports is often confused with a tariff because both systems effectively drive up the price of imports. The difference is in how the two ideas are executed. A tariff is a punitive fee on specific imports and a border tax is a tax exclusion for exports. Republicans say their idea acts as an incentive for companies to buy U.S.-made goods.
Critics argue that either way, consumers are the ones who ultimately pay the price when stores like Walmart that sell millions of imported goods increase prices to make up for the new higher taxes.
Rep. Mark Meadows (R-N.C.), who chairs the Freedom Caucus, a group of a conservative House members, didn’t endorse the idea when asked about it — but didn’t fully reject it either.
“We have to explore a number of options on how to pay for that. You know, generally speaking, I’m against tariffs,” said Meadows. “You know, I look at it from an economic standpoint. At the same time, I don’t want to hamstring the administration in things they are willing to explore.”
Sean Sullivan and Mike DeBonis contributed from Philadelphia to this report.