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USA Today reports this morning that if a proposal to impose a 20 percent tariff on Mexican imports into the US is voted into being by the US Congress and signed into law by President Donald Trump, "American consumers may have to pay more for products ranging from Toyotas to vegetables to beer."

The story notes that Mexico is the "second-biggest provider of agricultural products" to the US, "with imports amounting to $21 billion in 2015."

Tom Stenzel, President and CEO of the United Fresh Produce Association, tells the paper that "it is very troubling for world food and agricultural markets for Administration spokespersons to bandy about terms like a 20% tax on all imports from Mexico or other countries ... Consider the impact on American consumers of a 20% hike in the cost of foods such as bananas, mangoes and other products that we simply cannot grow in the United States. Consider also what other countries would do to block U.S. exports in retaliation. As the Administration looks to incentivize manufacturing jobs in the U.S., we urge President Trump to consider the unique nature of food and not place a new food tax on American consumers.”

There was some confusion about the exact nature of the proposal yesterday, as the New York Times writes that President Trump "appeared to embrace a proposal by House Republicans that would impose a 20 percent tax on all imported goods. The White House press secretary, Sean Spicer, told reporters that the proceeds would be used to pay for the border wall, estimated to cost as much as $20 billion. But a furious uproar prompted Mr. Spicer to temper his earlier remarks, saying the plan was simply 'one idea' that might work to finance the wall."

The New York Times paints the broader picture: "The idea of a broad tax on importers is suddenly at the center of the Washington policy debate, with the inevitable counting of potential winners and losers.

"Such a tax could hit retailers the hardest if it takes full effect, with their heavy reliance on products as varied as microwave ovens from China and T-shirts from Bangladesh. But few sectors of the American economy and few consumers would be unaffected.

"If such a tax were imposed on imports from around the world, automakers could face hefty tax bills not only for cars imported from Mexico and elsewhere but also for the many auto parts they buy from overseas for their assembly lines in the United States. Chemical companies, supplying practically every industry, could find themselves paying more for feedstocks. And energy companies could wind up paying more for imported oil."

However, there would be winners if the GOP plan were to become law, since it seems as if any border tariff would be combined with a large cut in corporate taxes.
KC's View:
This is a debate in which the food business absolutely must be engaged. If suddenly, a number of popular products are 20 percent more expensive, there could be consumer backlash ... and it may well be at the retailers, not the politicians who engineered the increase.