Looking at Reciprocal Tax on Imports

President Donald Trump said last week that his administration is looking into a reciprocal tax on imports.

The comment sparked concerns among economists and industry groups that the U.S. could impose higher tariffs on goods and trigger a trade war.

The president said the tax could apply to imports from countries that “are so-called allies, but they are not allies on trade.”

“We won’t charge them anything and we send them our product, same product as they’re sending us; and they’ll charge us 50 and 75 percent tax—and that’s very unfair,” he said during a White House meeting. “So we’re going to be doing very much a reciprocal tax, and you’ll be hearing about that during the week and during the coming months.”

Christine McDaniel, a senior fellow at George Mason University’s free-market think tank The Mercatus Center, said such a move could directly affect consumers.

“First, it is an import tax. This tax will make our imports more expensive and reduce competition. For consumers, and as others have noted, a 10 percent tax on imports is akin to a 10 percent additional tax on your Walmart checkout,” McDaniel said. “For businesses—many of whom rely on imported intermediate inputs—it will make their cost of doing business go up.”

Source: Business Insider