Feb 152017

Wash. D.C. msn.com

A proposed import tax floated by the Trump Administration to pay for a wall along the Mexican border could ultimately be passed on to American consumers. White House spokesman Sean Spicer said that the President is considering a 20% tax on all Mexican imports as a way to make Mexico pay for the wall–a demand that prompted Trump and Mexico’s president to scrap a planned meeting next week.

The idea triggered a cascade of criticism and jokes on social media about Americans facing price spikes on avocados and tequila. Soon after, Spicer said the tax was just one proposal to finance the wall. “The point is, American taxpayers are not going to fund it,” he said. In reality, they would because higher taxes on Mexican imports would mean either higher prices for buyers of those imports or higher priced American products if the imports are reduced, politicians and economists warned.

“Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big time bad idea. Mucho sad,” Sen. Lindsey Graham tweeted. Mauro Guillen, global economics professor at the University of Pennsylvania, called the tax idea, “insane”. “What your doing is taxing the American consumer,” he said. “Everything from Mexico will become more expensive. It’s a pretty big tariff.” If prices of Mexican imports rise, U.S. competitors will likely raise their prices. And demand for those products could plummet if consumers can’t find less expensive alternative sources. Trade between the U.S. and Mexico totaled $583.6 billion in 2015, according to the U.S. Trade Representative.

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