The US has warned it may impose a 20 per cent tax on imports from countries with a trade deficit with it to fund a wall President Donald Trump wants to build along America's southern border with Mexico, the White House has said.
The proposal, however, is currently only for Mexico, White House Press Secretary Sean Spicer told reporters travelling with Trump from Philadelphia to Washington DC aboard Air Force One.
This is one of the ways to pay for the wall that the US is planning to construct along the US-Mexico border. But on a broader scale, such a statement from Trump administration indicates imports from other countries – like India and China – could also be hit by the tax proposal, given the trade deficit the US has with them.
"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 with, like Mexico.
"If you tax that USD 50 billion at 20 per cent of imports, which is by the way a practice that 160 other countries do…
By doing it we can do USD 10 billion a year and easily pay for the wall just through that mechanism alone," Spicer said.
"Right now we are focused on Mexico, but I think as we look comprehensively at our trade situation and countries that we have a deficit for, this is something the president has been talking about holistically," he said.
The US president has talked about a border tax. "In particular companies that move out, ship things back in. But in this case, this really handles, is focused more on the immigration piece," he said.
"Remember, keep in mind there are 160 other countries that do just this. We are one of the only major countries, in fact probably the only major country that doesn't treat imports this way," Spicer said.
"In fact, we currently tax exports, not imports. This gets us in line frankly with the policies that the other countries around the world treat our products," he said.
"If you think about what a border tax on imports from countries like Mexico that we have a huge trade deficit does, that's really going to provide the funding," he added.
"But the other net positive that you have to realise is that through the wall, not only do we secure our border but I think we are going to save additional money that we would have had to spend on tracking down illegal immigrants and on immigration," Spicer said making a strong case for a physical barrier across the US-Mexico border.
He said the tax plan was in early stages and nothing has been finalised yet.