U.S. Sen. John McCain this week denounced the idea for a 20 percent border tax on imports, saying such a levy would “destroy Arizona’s economy.”
House Speaker Paul Ryan, R-Wis., is considering a so-called border-adjustment tax as part of a package of tax reforms he wants the House to take up soon. President Donald Trump’s administration has raised the idea of a border tax as a possible way to raise revenue for Trump’s promised wall on the U.S.-Mexico border.
Opposition from McCain, R-Ariz., is not totally unexpected. He signaled it in a Jan. 31 joint Arizona Republic guest column in which he and Sen. Jeff Flake, R-Ariz., wrote that “imposing new barriers and levying punitive tariffs against our closest neighbors could threaten our trade relationship, cost Arizona billions of dollars and thousands of jobs, push our state into a recession and undermine security cooperation with our southern neighbor.”
McCain, who has defended the North American Free Trade Agreement among the United States, Mexico and Canada as economically beneficial to Arizona, was unequivocal about his rejection of the border tax in comments made Thursday to Politico.
“It’ll destroy Arizona’s economy. That’s my only concern,” McCain is quoted as saying. “First thing will happen is that there’ll be retaliation. You think the Mexicans are going to sit still for it?”
Flake spoke out against the border-adjustment tax in a March 8 Senate floor speech, saying, among other possible consequences, it would hurt the American middle class by increasing costs for U.S. consumers.
“I’m certain that I’m not the only one hearing that this approach could make everyday consumer products more expensive at the very places that middle-class families shop the most,” Flake said. “From the aisles at big-box stores to the checkout lines in grocery stores, household staples could be pushed out of reach for those who can least afford it.”
Flake, like McCain a strong supporter of free trade, also brought up the possibility of an escalating trade war.
“If the protectionist trade policies of the past have taught us anything, it’s that countries tend to retaliate when they believe trade obligations have been violated,” he said. “When we increase barriers to trade, nobody wins.”
The stands taken by McCain and Flake won praise Friday from Americans for Affordable Products, a national organization formed to fight the border-adjustment tax.
The group estimates that a 20 percent tax on imports would cost U.S. shoppers an extra $1,700 annually for “basic necessities.”
“Senators McCain and Flake represent a united front in opposition to this tax proposal that would threaten retail jobs throughout the state, which account for one in four jobs,” Michelle Ahlmer, the Arizona Retailers Association’s executive director, said in a written statement. “If a BAT is adopted, many businesses will be forced to raise prices, lay off staff or close up shop altogether.”