Mexico claims border tax to pay for Trump’s wall would hit US consumers

27 Jan 17

Mexico has hit back at US president Donald Trump’s proposal to impose a 20% tax on Mexican imports to pay for his promised border wall.


Speaking yesterday, Mexico’s foreign minister Luis Videgaray said this would only make goods more expensive for US consumers and that paying for the wall was “not negotiable” for Mexico.

His comments come after Mexico’s president Enrique Peña Nieto cancelled a planned meeting with Trump, amid deteriorating relations between the two neighbours.

Trump has stoked resentment within the US’ third-largest trading partner after repeatedly pledging during his election campaign to build a 32,000km wall along the US-Mexico border, and that Mexico would pay for it.

Yesterday, White House press secretary Sean Spicer outlined how that might be achieved: a 20% tax on Mexican imports that would generate approximately $10bn per year and “easily pay” for the wall.

The country exports around $300bn worth of goods to the US every year.

Retaliating to the suggestion, Videgaray said: “A tax on Mexican imports to the US is not a way to make Mexico pay for the wall, but a way to make the North American consumer pay for it through more expensive avocados, washing machines, televisions.”

Reince Priebus, the White House chief of staff, later said the border tax is one of only several options being considered.

The idea is welcome to some Republicans, who believe that a border tax reform is long overdue. Currently, the US imposes taxes on exports but not imports at the border.

However, in previous visions of border overhauls, taxes on exports would be used to cut corporate taxes.

Others agree with Videgaray’s suggestion that any increases in taxes on Mexican imports would only be passed on to American consumers in prices, and add that levying high tariffs would weigh on growth and potentially spark tit-for-tat retaliations.

Building the wall was one of Trump’s key election promises, and one that has triggered massive controversy as well as speculation about how realistic the plan actually is.

Estimates for how much the wall would cost range from Trump’s claims of $10-12bn to a Washington Post study putting the figure at more like $25bn. That does not include maintenance costs, which would probably reach hundreds of millions of dollars per year.

The 650 miles of fencing the US has already installed along the border cost more than $7bn, running over budget and proving much more difficult than first anticipated.

Like the fencing, Trump’s wall would have to contend with a 1970’s treaty that prevents border structures from disrupting the flow of rivers along the border, as well as traversing far more remote and mountainous regions.

In the run up to his election, many questioned whether Trump would actually follow through on what they saw as bizarre, unfeasible and often-changing pledges.

But his first week in office, Trump has moved quickly on his plans. He has issued a series of significant executive orders, including one directing the construction of the wall

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