Canadian Manufacturing

U.S. border tax has little support in Washington, says Natural Resources Minister

Federal resource minister Jim Carr made the remarks after a series of U.S. meeting; Democratic lawmaker John Delaney told a panel on Canada-U.S. infrastructure "...it's never going to happen... It doesn't have the votes"



WASHINGTON—Canadians concerned about the idea of a tariff-like tax being imposed on all U.S. imports might be pleased to learn the policy faces huge opposition in Washington.

That’s the message being taken away from a Washington visit by Canada’s Natural Resources Minister Jim Carr.

A series of meetings this week with lawmakers, administration officials, and business people have raised questions about whether that import tax has any chance of passing in an upcoming omnibus tax bill.

“There was very little support for it,” Carr told reporters Thursday.

“It’s not just that people here are expressing an agreement in principle with free trade. It’s that they are specifically saying that a border adjustment tax would not move along the interests of Canada and United States in the energy market, and that was expressed to us with any number of people with whom we met.”

Others are putting it more bluntly.

A Democratic lawmaker, John Delaney, told a panel on Canada-U.S. infrastructure this week hosted by The Hill newspaper: “Let’s face it—it’s never going to happen… It doesn’t have the votes. We’re never going to do it.”

That doesn’t mean the idea can’t be revived in other forms.

The original proposal comes from Republican leaders in the House of Representatives and is designed to achieve two goals shared by many American policy-makers: raising revenues to offset tax cuts, and repatriate cash and jobs sent overseas by U.S. companies.

The U.S. Tax Foundation estimates the proposal would raise a massive amount of cash—US$1.1 trillion over a decade.

The stated logic behind it is that other countries already offer refunds on value-added taxes like the GST when companies export products to the U.S., and that those act as an incentive for companies to offshore jobs, move abroad, and export their products back into the U.S.

Congressional leaders like Paul Ryan have argued this would remedy that.

Yet critics have warned the idea will provoke a trade war, face international sanctions, and drive up the cost of everything Americans import.

It has fierce opposition within the White House itself—President Donald Trump has sent mixed messages, while his staff debates the issue.

Yet there was a clue this week that the administration might attempt to find a Plan B that achieves similar goals.

It was embedded in the draft letter on NAFTA the administration sent to Congress. The letter laid out possible U.S. priorities for the NAFTA renegotiation.

One element in that letter said: “Seek to level the playing field on tax treatment.”

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