Trump proposes 20% tax on imports from Mexico to pay for wall

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U.S. President Donald Trump will propose a 20 percent tax on all imports from Mexico to pay for the wall on the U.S.-Mexico border, the White House said on Thursday, just hours after Mexico’s leader canceled his scheduled meeting with Trump.

White House spokesman Sean Spicer, talking to reporters on Air Force One, said the administration has been in contact with Congress about the proposal and is working to create a plan. He offered the tax on imports as a possible option.

Spicer said such a tax would be part of a tax overhaul that Trump is working on with lawmakers, and the tax could also be applied to other countries that have a trade deficit with the United States. “Right now our country’s policy is to tax exports and let imports flow freely in, which is ridiculous,” he explained.

“By [taxing imports from Mexico at 20 percent] we can do $10 billion a year and easily pay for the wall just through that mechanism alone. That’s really going to provide the funding,” Spicer said. “It clearly provides the funding and does so in a way that the American taxpayer is wholly respected.”

In an interview with NBC News hours later, Trump confirmed the idea of an import tax. “Look, we cannot lose our companies to Mexico or any other place and then have them make the product and just send it across our border for free. We’re going to put a substantial tax on those countries,” he said.

As Mexico is the United States’ 3rd largest supplier of goods imports, such a tax could have far-reaching consequences for American consumers, who may end up paying more for their products. It was not immediately known whether such a proposal has wide support in Congress.

U.S. Senator Lindsey Graham, responding to the news, said that such a tax would be a “huge barrier” to economic growth and warned that Mexico could in return also impose a tariff. “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho Sad,” he tweeted.

Earlier on Thursday, U.S. Senate Majority Leader Mitch McConnell said the proposed wall is expected to cost between $12 billion and $15 billion. Trump has said Mexico will end up paying “100 percent” of those costs “in some form”, but Mexico has repeatedly rejected that idea.

Also on Thursday, Mexican President Enrique Peña Nieto announced that he had decided to cancel next week’s meeting with Trump after he signed an executive order to move forward with the border wall. “I have said it over and over again: Mexico will not pay for any wall,” Peña Nieto said on Wednesday night.

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