Why Trump’s ‘Big Border Tax’ Gets Taken Seriously: QuickTake Q&A

To make good on his promise to put America first, Donald Trump’s weapon of choice is imposing (or threatening) stiff tariffs on nations he deems to have an unfair advantage. His biggest targets are China and Mexico, but he also threatens to punish U.S. companies that send jobs overseas by hitting their goods with a tax when they send goods into the U.S. His broad authority to impose tariffs may explain why companies have been quick to withdraw plans to expand factories in Mexico. Steep tariffs would raise costs for U.S. companies that import goods, increasing the attractiveness of producing in the U.S. The problem is that tariffs would also raise prices for American consumers, especially if other nations retaliate by imposing tariffs of their own -- leading to a global trade war like the one that began at the start of the Great Depression.

He seems to mean a tariff, or a tax on imported goods. But while typical U.S. tariffs are levied on certain products from elsewhere (tires from China, steel from Japan) in order to protect American companies, Trump talks of slapping them on American companies that relocate operations to other countries. For example, he’s mentioned a 35 percent tariff on autos made by U.S. companies in Mexico. If jobs go outside the U.S., "we are going to be imposing a very major border tax on the product when it comes in, which I think is fair," Trump said on his first full workday as president. Such a tariff would likely be barred under the North American Free Trade Agreement, though Trump is intent on renegotiating that accord anyway.