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
<.SPXRT> ended down 1 percent. Shares of Wal-Mart Stores <WMT.N> 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 <BA.N>, Caterpillar
Inc <CAT.N> and General Electric Co <GE.N>, 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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