Update: Citing an unnamed administration official, Bloomberg reports that the White House has "no formal proposal on the table for a so-called reciprocal tax on imports" - presenting yet another case of an administration official contradicting their boss in the press.
Trump is set to meet with lawmakers Tuesday to discuss trade issues.
As BBG reminds us, a House Republican proposal to tax imports, known as the border-adjusted tax, was removed from the Republican tax plan after being heavily criticized by retailer lobbyists vociferously objected.
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US President Trump, who has already raised taxes on the US consumer once this year, is vowing to do so again. On Monday, the president suggested a reciprocal tax on imported goods (details were not forthcoming). Generally, such taxes tend to hit lower income consumers more than higher income consumers.
The Wall Street Journal reported that Trump's blueprint surprised his top aides, who were quick to note that no formal plans have been drawn up yet. The comments about the reciprocal tax were made during a meeting at the White House with mayors and governors to discuss his infrastructure plan, which was officially unveiled yesterday.
However, Trump seemed pretty adamant that such a plan would, in fact, be put into place.
“We are going to charge countries outside of our country - countries that take advantage of the United States,” Mr. Trump said. “Some of them are so-called allies, but they’re not allies on trade.”
As a result, he said, “we’re going to be doing very much a reciprocal tax, and you’ll be hearing about that during the week and the coming months.”
Trump famously campaigned on raising trade barriers, including threatening to slap a 30% import tax on Chinese goods, as a central tenant of his nationalist agenda. But he has been slow to implement measures that typically pro-free trade Republicans oppose, though his administration has made some notably protectionist moves, like slapping Canadian aerospace company Bombardier's C-Series jet with a 300% import tariff for purportedly anticompetitive subsidies. he also withdrew the US from the TPP - a complex, multilateral trade deal that was one of the hallmark accomplishments of the Obama administration.
While some anonymous aides were reportedly chagrined by the plan, others expressed a more sanguine view:
After the meeting, one senior administration official said Mr. Trump was considering responding in-kind to countries that put tariffs on American-made products. “The reciprocal tax is, simply, what you do to us, we’ll do to you,” the official said. “It’s nothing formal right now.”
WSJ says Trump repeatedly mentioned the reciprocal tax during his infrastructure meeting, even bashing his predecessors for being too “lazy” to rework trade policies after World War II and the Korean War.
“After World War II, we helped Germany, and we helped all countries. You had the Korean War, we helped South Korea. We helped everybody, and nobody changed,” Mr. Trump said, adding that these countries are now “very wealthy” and “could pay us back.”
“The reason nothing happened is that, No. 1, no imagination. No. 2, the people that were in my office, and in other offices, were lazy. But we’re not going to be letting it go, because it’s truly affected our country.”
Since last April, the administration has also been exploring the possibility of new tariffs on steel and aluminum imports, and recently imposed tariffs on imported solar panels, a move that was interpreted as a swipe at China.
Trump also famously ordered a review of Chinese trade practices pertaining to transferring intellectual property rights for Chinese firms under an obscure trade-related statute that was last widely used during the Reagan administration. This investigation deadline is August, and could result in wide-ranging tariffs against America's largest trading partner.