President-elect Donald Trump is threatening to impose heavy taxes on US companies that move jobs overseas and still try to sell their products to Americans.
But the plan could drive up prices for US businesses and consumers and risk setting off a trade war – if it’s legal to begin with.
In a series of early-morning tweets on Sunday, Trump vowed a 35% tax on products sold inside the US by any business that fired American workers and built a new factory or plant in another country.
Trump campaigned on a vow to help American workers but also to cut taxes and regulations on businesses.
Trump tweets “there will be a tax on our soon to be strong border of 35% for these companies wanting to sell their product, cars, AC units etc., back across the border.”
He says companies should be “forewarned before making a very expensive mistake.”
Gary Hufbauer, senior fellow at the Peterson Institute for International Economics, says Trump would face a potent legal challenge if he tried to impose taxes, known as tariffs, on specific companies without congressional approval.
Hufbauer also doubts that Trump could find a group of companies – those that move jobs overseas, then ship goods back into America – for special tariffs. “I’m skeptical,” he says, predicting that courts would block such a move.
During the presidential campaign,Trump repeatedly threatened to impose tariffs – 35% on Mexican imports, 45% on Chinese. Tariffs are meant to give homegrown companies a price edge by making their foreign competitors’ products more expensive and to punish foreign countries for unfair trade practices.
Since Trump’s election, his team has described tariffs as a potential tool to be used to pry concessions from America’s trading partners. “Tariffs are part of the negotiation,” Wilbur Ross, an investment banker slated to become Trump’s Commerce secretary, told CNBC last week.
