Americans may have to pay more for tequila, cars, eyeglasses and many basic groceries if a proposal the White House floated on Thursday to impose a 20% tariff on Mexican imports takes effect.
The Associated Press reports a Toyota Camry could cost about $1,000 more. That’s according to Jim Lentz, CEO of Toyota North America, who notes that a quarter of the car’s parts are imported.
The tax on Mexican imports would fund a massive border wall President Donald Trump has promised to build along the U.S.-Mexico border in order to deter the entry of illegal immigrants into the United States.
The White House says the new measure could be part of a comprehensive tax reform package that Trump and Congress will work out. And White House officials later clarified that the tax was but one possible way Trump could finance the wall.
The money wouldn’t necessarily be coming from Mexican taxpayers or the Mexican government. While the tax would land first on companies exporting from Mexico, the costs would likely be passed on to consumers. That leaves Americans footing much of the likely bill.
Trump has said he’s OK with being “reimbursed” at a later point because he is keen to start building the wall immediately.
U.S. exporters are behind the House plan because it would reduce their taxes. However, importers, including big retailers and consumer electronics firms, say the higher prices for Mexican products could hurt sales. And that means American jobs. Retailers such as Wal-Mart also could face higher tax burdens.
