Trump 35% Tariff Meets Opposition

“The U.S. is going to substantially reduce taxes and regulations on businesses,” Trump tweeted on Sunday. “But any business that leaves our country for another country, fires its employees, builds a new factory or plant in the other country, and then thinks it will sell its product back into the U.S. without retribution or consequence, is WRONG!

“There will be a tax on our soon to be strong border of 35% for these companies … Please be forewarned prior to making a very expensive mistake! THE UNITED STATES IS OPEN FOR BUSINESS.”

House Majority Leader Kevin McCarthy, R-CA, said he will not back the tariff on companies that move operations abroad. “There’s other ways to achieve what the president-elect is talking about,” said McCarthy. “I don’t want to get into some type of trade war.”

Speaker of the House Paul Ryan also expressed his opposition to the tariff saying changes in the corporate tax code would be more effective way to keep companies in the U.S. “I think we can get at the goal here,” he said, “which is to keep American businesses American, build things in America and sell them overseas—that can be properly addressed with comprehensive tax reform.”

There are major questions about the legality of punishing U.S. companies by imposing onerous tariffs. A tariff on specific or groups companies would need to be approved by congress, said Gary Hufbauer, an expert in trade law at the Peterson Institute for Economics. In an Associated Press explanation of the tariff proposal, Hufbauer said an attempt to use executive action or executive order to impose a punitive tariff on specific companies would likely be blocked by the courts. The president has the broad authority to impose tariffs on specific categories of imported goods, he said, but cannot single out specific companies that produce them.

“Tax cuts and deregulation will make the American economy great again, but tariffs and trade wars will make it tank again,” David McIntosh, president of the conservative group Club for Growth, said in a statement, adding, “The majority leader is right to caution against protectionism and to urge a robust debate on free markets and trade.”

Karl Rove, former President George W. Bush advisor, responded to a question posed by SMU Publisher John Packard on the topic at the HARDI conference in Colorado earlier this week. He told SMU, “If we go back to a protectionist era we are going to be in bad shape.” He went on to say an import tax of 35 percent or 20 percent would hurt American’s quality of life. “It’s not in our national interest.” 

In a response to Donald Trump’s tweet, Rep. Justin Amash, R-MI, had one of his own: “This would be a 35% tax on all Americans—a tax that especially hurts low-income families. Maybe the slogan should be #MakeAmericaVenezuela.”