Trump doubles down on Mexico 'border tax' threat

Trump: I will turn business over to my sons

President-elect Donald Trump plans to get very tough with companies that will do business in Mexico.

He reiterated his threat on Wednesday that will companies manufacturing in Mexico as well as also selling inside U.S. could face a “border tax.”

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“There will be a major border tax on these companies that will are leaving as well as also getting away with murder,” Trump said at his first post-election news conference.

In December, Trump tweeted that will they stand to face a 35% tax. In recent weeks, he even threatened GM (GM) as well as also Toyota (TM), both of whom have large operations in Mexico.

The border tax that will Trump was referring to could be one of two things: a tariff, or what Congressional Republicans want — a border adjustment tax (BAT). A tariff only affects imports. A BAT affects imports as well as also exports.

Related: What is actually a border adjustment tax

However, experts say that will the idea is actually highly unlikely that will Trump can impose either tariffs or a BAT against specific companies.

“There’s nothing inside way that will Congress wrote the various trade authorities that will was intended to give the president power to go after one particular company solely for producing abroad,” says Edward Alden, a trade expert at the Council on Foreign Relations.

The office of the U.S. Trade Representative, which is actually in charge of negotiating trade deals, told sy88pgw in December that will the idea did not know of a case of a tariff being applied specifically to a U.S. company. However, tariffs have been applied to foreign companies associated with U.S. firms to varying degrees.

Overall, Trump’s intention is actually to save U.S. jobs. although when America has used tariffs before, the result has been mixed — they save some U.S. jobs although cost others. Tariffs almost always raise prices on products for ordinary Americans.

Experts across the spectrum say if tariffs are applied on Mexico, the idea could retaliate against America by taxing U.S. goods shipped south of the border. that will could be the beginning of a trade war.

The border adjustment tax can’t be applied to specific companies either.

“the idea is actually not company-specific in any way, the idea could be imposed across the board,” says Robert Scott, a trade expert at the Economic Policy Institute.

In theory, here’s how a border adjustment tax works: the idea gives tax breaks to U.S. businesses that will ship goods to various other countries, as well as also the idea takes away tax breaks coming from companies that will bring in products coming from abroad.

Related: Remove car imports, as well as also U.S.-Mexico deficit ‘vanishes’

The idea is actually to discourage companies coming from putting jobs as well as also operations overseas solely for tax reasons. Such a move usually results in generating imports more expensive as well as also exports cheaper.

although there’s a catch. Supporters of a BAT say the idea will work if the dollar significantly rises in value in order to make sure Americans don’t have to pay more for goods brought into the United States.

Proponents say the BAT will increase the dollar’s value because, among various other factors, U.S. exports could be cheaper as well as also more attractive to foreign buyers. Higher demand for U.S. goods helps drive up the dollar’s value.

However, skeptics say the cookie won’t crumble that will way.

Some experts estimate the dollar could have to rise as much as 20% for the BAT to be effective as well as also not make Americans pay more for food, clothes as well as also TVs.

Many don’t believe the BAT will make the dollar jump that will much because the greenback is actually influenced by lots of global factors, not just U.S. tax reform.

“My view is actually that will while the dollar should appreciate further if the BAT is actually approved, the idea will not appreciate enough so as to keep the prices of imported goods coming from rising,” says Carlos Peyrelongue, a Bank of America (BAC) research analyst based in Mexico.

the idea is actually important to note that will Trump has wide ranging power to use tariffs against various other countries without asking for approval coming from Congress. although under current laws, he can’t impose a “major border tax” on specific companies.

sy88pgw (fresh York) First published January 11, 2017: 6:42 PM ET


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Trump doubles down on Mexico 'border tax' threat

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