UPDATED: I am keeping the post below because the original White House statement sounds like a 20% import tax, or tariff, which would be bad. But later reports are coming out that what the President is actually talking about is a “border tax,” which is essentially a tax readjustment. We currently tax exports, but do not tax imports. Many countries tax imports as a way of dealing with corporate taxation. That has its benefits.
But the way this is being trotted out may very well make it radioactive if a border tax is the intent.
Donald Trump has announced a plan to massively increase illegal immigration from Mexico into the United States and, as a bonus, drive the American economy into recession.
Trump’s plan would impose a 20% tax on all goods imported from Mexico as a way to pay for his wall. In so do, that would drive up the costs of goods in the United States causing Americans to pay more and Americans to pay for his wall.
President Trump projects that this would generate $10 billion a year, but what will happen is two fold. First, we will go into recession as a trade war starts and the cost of goods and services rises. Second, American businesses will probably shut down facilities in Mexico.
The second one sounds good, but that will drive up unemployment in Mexico and encourage an increase in illegal immigration into this country, which has actually been declining now for several years.
This is not a good plan the President is proposing and hopefully he can be dissuaded from it.