Trump Plans 20% Tax on Mexican Imports to Pay for the Wall

Trump Plans 20% Tax on Mexican Imports to Pay for the Wall

The U.S. President Donald Trump has finally offered the plan for erecting a wall on the U.S. Mexican border. Trump has always said that he will make Mexico pay for the wall and Mexican leaders have denied that they will pay for the wall. Mexico has faced major currency devaluation after Donald Trump won the U.S. Elections in November 2016. Now, Trump has talked about 20% tax on all Mexican imports and the money will be used to build a wall on the U.S. Mexico border.

The White House informed that the President is looking for other options as well. The 20% tax on Mexican imports will have a major impact on Mexican economy in short term. However, the tax on Mexican imports could increase the price of certain goods for U.S. consumers. Eventually, the U.S. consumers will be paying for the wall as most of the manufacturers and importers from Mexico will pass on the extra cost to customers. They might see decline in demand with 20% increase in prices but most businesses won’t take the hit on their own balance sheet.

However, the tax could offer an advantage for the U.S. manufacturers competing with Mexican producers. White House press secretary Sean Spicer said, “By doing it that way 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. Mexico's exports to the US in 2015 was valued at $316.4 billion. The trade deficit is estimated to be $50 billion.”

Mexican President Enrique Pena Nieto canceled a planned meeting with President Trump after he repeated his election promise of building a wall. Mexico has suffered financially after President Trump has come to power. While President Trump’s repeated altercations relating to Mexico have been criticized by many leaders in the United States, they have also brought the issue of Mexican drug cartels, crime and illegal immigration in focus.

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