President Trump and the Republican Congress have consistently raised the notion of a “border tax” to address trade imbalances. While the President has advocated a border tax of 20% on imports from Mexico, congressional Republican leadership has instead proposed a border adjustable tax on all imports.

What Is the Border Adjustable Tax?

The Republican “Blue Print” for tax reform proposed a “border adjustable tax” as a primary vehicle to create revenues to offset overall corporate and personal tax rate reductions. Instead of a duty or an excise tax collected at the border, as perhaps imagined by President Trump, the Republican idea posits adjustments to taxes administered by the IRS. Generally, under the Blue Print, companies would be allowed to deduct certain costs related to exports but prevented from deducting certain, or possibly all, costs related to imports.