White House suggests 20 percent tax on Mexico, top U.S. food supplier
President Donald Trump would pay for his proposed 2,000-mile wall along southern U.S. border with a 20 percent tax on all imports from Mexico, the largest source of U.S. agricultural imports, said White House press secretary Sean Spicer. Also the No. 3 market for U.S. farm exports, Mexico is forecast to ship $22 billion worth of food and ag goods to its northern neighbor this fiscal year.
Food imports account for one-fifth of U.S. food consumption, according to the USDA, and Mexico would provide 20 percent of ag imports this year, suggesting Mexico would be the source of 4 percent of total food consumption. A border tax would be expected to raise the price of imported goods.
Asked if American consumers would foot the bill, Spicer said, “I think what it’s going to do is lift up the wages of American workers” because the wall would shut off illegal immigration.
Spicer told reporters “a border tax on imports from countries like Mexico … that’s really going to provide the funding” for the wall. The 20 percent tax could generate $10 billion a year to pay for construction of the wall, he said, basing his calculation on a $50 billion trade deficit with Mexico, rather than imports, valued at $317 billion in 2016.
Later in the day, White House chief of staff Reince Priebus told a different group of reporters that the border tax was among a “buffet of options” and Spicer said there “clearly are a bunch of ways” to pay for the wall that did not require tax dollars, said USA Today.
The major ag imports from Mexico are fresh vegetables and fruit, wine and beer, snack foods, and processed fruit and vegetables, says the U.S. trade representative’s office.
In its latest forecast of U.S. agricultural trade, the USDA pegged imports from Mexico at $22 billion in the current fiscal year, down by $700 million from its mid-summer estimate. “This is largely due to a reduction in the expected supply of horticultural and sugar and tropical products, in part due to uncertainty surrounding the increasing volatility of the peso,” said USDA. “However, Mexico is expected to remain the top supplier of agricultural products at $22 billion, followed by Canada at $21.7 billion.’
Horticultural products, a category that encompasses fruits, vegetables, fruit juices, nuts, wine, malt beer and nursery products, have accounted for roughly half of U.S. agricultural imports since 2002. They are estimated at a record $53.3 billion this year, out of total imports of $112.5 billion.
Meanwhile, Mexico is forecast to buy $18.3 billion in U.S. ag exports, including corn and soybeans. It is the largest market for U.S. pork, poultry and dairy products.
The White House floated the 20 percent border tax on the same day President Enrique Pena Nieto cancelled a meeting with Trump, set for next week. The Mexican leader acted after Trump said there was no point in meeting if Mexico would not pay for the wall. Trump said the cancellation was a joint decision. “Unless Mexico is going to treat the United States fairly, with respect, such a meeting would be fruitless and I want to go another route. We have no choice,” said Trump.