Trump’s plans to pay for a Mexican border wall could trigger the global trade war he has long threatened. The House Republican plan he seemingly embraced Thursday as a means of paying for the barrier is a levy for boosting consumption of domestic products that could backfire by angering allies and upending the entire global trading system, Megan Cassella reports.
Longtime trading partners – and not just Mexico – could retaliate, making American consumers pay more for everything from food to electronics and putting U.S. companies out of business. The so-called border adjustment tax could trigger cases before the World Trade Organization, spur other countries to slap levies on American products and put some U.S. companies at a disadvantage with international competitors.
“Would they retaliate immediately?” asked Dan Ikenson, director of the trade policy center at the free-market Cato Institute, referring to the response of trading partners to the plan. “In the age of Trump, governments may not have the manners that they once had and may just unilaterally go after U.S. products. That’s quite possible.”