Exclusive: Trump says
Republican border tax could boost U.S. jobs
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[February 24, 2017]
By Steve Holland
WASHINGTON
(Reuters) - U.S. President Donald Trump on Thursday spoke positively
about a border adjustment tax being pushed by Republicans in Congress as
a way to boost exports, but he did not specifically endorse the
proposal.
Trump, who has lashed out at U.S. companies for moving operations and
jobs to countries such as Mexico, had previously sent mixed signals on
the proposal at the heart of a sweeping Republican plan to overhaul the
tax code.
"It could lead to a lot more jobs in the United States," Trump told
Reuters in an interview, using his most approving language to date on
the proposal.
Trump sent conflicting signals about his position on the border
adjustment tax in separate media interviews in January, saying in one
interview that it was "too complicated" and in another that it was still
on the table.
The proposal has divided American businesses. Critics say the planned 20
percent tax on imports could be passed along in higher prices to
consumers, including manufacturers that rely on imported goods to make
their products.
Some critics have warned of a potential global trade war which would
sharply curtail U.S. and world economic growth.
Advocates say U.S. exporters will gain as their revenues will be
excluded from federal taxes. They say the tax on imports will encourage
domestic production and cause the already strong dollar to rise,
offsetting upward pressure on import prices.
COMPANIES 'TO COME BACK'
Trump has also called for a 35-percent border tax on U.S. companies that
move jobs abroad and import products back into the U.S. market. It has
been unclear in the past if those references referred to the border
adjustment proposal.
"I certainly support a form of tax on the border," he told Reuters on
Thursday. "What is going to happen is companies are going to come back
here, they're going to build their factories and they're going to create
a lot of jobs and there's no tax."
White House spokesman Sean Spicer also came to the defense of border
adjustment on Thursday, disputing the claim that it could lead to higher
consumer prices. "That benefits our economy, it helps American workers,
it grows the manufacturing base," Spicer told reporters at a White House
briefing.
The Mexican peso <MXN=> weakened slightly against the U.S. dollar
immediately after Trump's comments and was last trading at 19.68 per
dollar. Earlier on Thursday, the Mexican currency hit its strongest
level since Trump's Nov. 8 election victory.
Stocks of retailers, which could be hurt by border adjustment, weakened
on Wall Street after Trump's remarks. The S&P 500 retailing index
ended down 1 percent. Shares of Wal-Mart Stores slipped and closed down
0.6 percent. Trump said his administration will tackle tax reform
legislation after dealing with Obamacare, the health insurance system
that his fellow Republicans have bashed since it was put in place in
2010 by his predecessor, President Barack Obama.
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President Donald Trump is interviewed by Reuters in the Oval Office
at the White House in Washington, U.S., February 23, 2017.
REUTERS/Jonathan Ernst
Earlier on Thursday, Treasury Secretary Steven Mnuchin told CNBC the Trump
administration aimed to formulate a tax plan with support from the
Republican-controlled House of Representatives and Senate and pass it before
August.
BUSINESS DIVIDED
Lawmakers and corporate lobbyists say the border adjustment tax could die in
Congress, potentially jeopardizing the prospects for tax reform, mainly because
of opposition from a handful of Senate Republicans.
But experts say Trump's endorsement could change the political climate. "If
Trump supports it, that makes it considerably more likely," Harvard Business
School professor Mihir Desai told Reuters.
Trump's comments were followed by dueling statements from lobbying groups.
A statement from the pro-border adjustment American Made Coalition said the
White House was "sending its strongest signals yet that it’s leaning toward
supporting the House blueprint with border adjustability."
The
Americans for Affordable Products coalition that opposes the border adjustment
tax issued a statement saying Trump’s remarks were "consistent with what he’s
already said" and that it was "impossible" to know if they were specific to any
individual legislative policy.
Trump spoke to Reuters after meeting with more than 20 chief executives of major
U.S. companies to discuss ways to return manufacturing jobs to the United
States, one of the linchpins of his 2016 presidential campaign.
Many CEOs of large multinationals back the border adjustment tax. The chiefs of
16 companies, including Boeing Co, Caterpillar Inc and General Electric
Co, sent a letter to Congress on Tuesday urging support for it.
A border adjustment has emerged as the most controversial segment of the House
Republican tax reform blueprint. Under the House plan, it would raise more than
$1 trillion in revenues to help pay for a corporate tax cut.
(Reporting by Steve Holland; Additional reporting by David Morgan, David
Shepardson and Ginger Gibson in Washington and by Lewis Krauskopf in New York;
Editing by Kevin Drawbaugh, Paul Simao and Howard Goller)
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