President Trump tiptoed closer to an endorsement of the House GOP tax plan and its controversial border adjustment Tuesday night in his address to a joint session of Congress, borrowing the rhetoric of Republicans who have suggested that their plan is necessary to level the international playing field.
As House Speaker Paul Ryan, R-Wis., the author of the tax reform proposal, smiled behind him, Trump delivered a line and an anecdote that could be read as implicit support for Ryan’s plan. At the same, Trump’s ambiguous comments also could be interpreted as a call to negotiate reductions in tariffs imposed by other countries.
“Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes — but when foreign companies ship their products into America, we charge them almost nothing,” Trump said.
The claim that the U.S. products face a disadvantage because the government doesn’t border-adjust taxes has been a major talking point for House Republicans. On Tuesday night, Trump sharpened the point by citing the experiences relayed to him by Harley-Davidson, a company from Ryan’s home state. The motorcycle maker, he noted, gets taxed by foreign governments when it attempts to sell its products overseas.
The House GOP plan would tax imports as part of a broader corporate rate-cutting reform that would tax goods based on where they are sold. In the plan, companies no longer would be allowed to deduct the cost of imported goods and services, but would no longer pay any taxes on revenues from exports.
Republicans say that the change would encourage domestic hiring and business expansion and bring the U.S. up to date with other advanced nations, which generally impose value-added taxes that are adjusted at the border.
Trump has provided conflicting comments on the plan, creating doubt about his view of its merits. White House advisers reportedly are split on whether to back Ryan’s plan.
Meanwhile, retailers and other industries that would see taxes on imports rise under border adjustment have lobbied hard to stop it.
Trump’s comments Tuesday night might have been a sign that he is leaning toward endorsing the House GOP plan. On Twitter, Ryan’s aides suggested as much.
But they also could be a sign that he has not deviated from his focus on renegotiating trade deals, which generally seek to lower tariffs. Unlike value-added taxes, which apply taxes on foreign goods that also apply to goods made within the country, tariffs single out foreign products to discourage their sale.
