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In Every Border Battle, There are Winners and Losers

March 20, 2017

One of the most controversial parts of President Trump’s proposed economic policy platform is his plan for the border adjustment tax. You’ve probably heard about it – he wants to add additional tariffs on all imports to the U.S.

 

If nothing more, it follows his “America First” economic philosophy. After all, we want to be exporting goods, not importing them! 

 

On paper, it sounds wonderful. But here’s the thing with international commerce – no matter what we do (or don’t do), there will be resulting winners and losers.

 

Let’s be honest, there is hardly anything made here that doesn’t have some imported component to it. We heard all about Chinese steel being used for domestic construction projects during the campaign. The point is that there are unintended consequences and negative aspects of taking a hard stance one way or the other on global commerce.

 

And no matter how it shakes out, any additional taxes or costs will almost certainly be passed down by companies to their customers.

 

This back-and-forth could start an international price war. I mean, if we start charging an additional 20 percent on all Mexican imports, for instance, who’s to say they won’t do the same or worse to us?

The global economy is already unstable. That’s not to say our international deals couldn’t use some renegotiating. However, aggressive border battles won’t do anyone much good in the long run.

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This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. Please consult with a professional specializing in these areas regarding the applicability of this information to your situation.

Andrew Wood, Dan Simon and Alison Slezak are Investment Advisor Representatives. Advisory services are offered through CoreCap Advisors, LLC., a Registered Investment Advisor. CoreCap Advisors, LLC and Daniel A. White & Associates, LLC are separate & unaffiliated entities. 

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