During the 2016 election, one major issue for all candidates was the future of taxes. After Donald Trump’s victory as president, the prevailing thought has been that taxes will be lowered. But as 2016 was coming to an end and 2017 was getting off to a start, the public narrative around taxes changed to a Border Adjustment Tax as the way to pay for lower corporate taxes.

While the ultimate tax outcome remains unknown, there is a growing sense that the so-called border tax may be dead before it can even come up for a vote. Steve Forbes has been rather vocal in the week of February 10 against the border tax. Forbes even warned that a border adjustment tax could cost American consumers over $100 billion per year — or $1 trillion over a decade.

There are now also many other efforts working against the border tax. On top of the border tax being controversial, it is incredibly difficult to explain. The current House proposal is for exports to not be taxed while imported goods are taxed with a proposed rate of 20%. A border tax does fit within a theme of making foreign nations and foreign companies help to pay for coming tax cuts.

What should matter here and now is that there is a growing feeling that a border tax is losing ever more steam. President Trump did come out on February 9 with the promise a phenomenal tax plan in the coming weeks. While there were no details about the plan, the border tax also received no mention at all.

24/7 Wall St. has been studying and reviewing a universal border adjustment tax in depth. The reality is that a universal border tax just looks like it is too hard to sell to the public. If a universal border tax is going to drive up the costs of goods for consumers as a means of lowering corporate tax rates, how on earth will that make sense to Joe Public?

Now consider President Trump’s recent threats to tax companies with a border tax. That threat has been more about taxing companies who want to send jobs and factories outside of America and bringing those goods produced back in to sell to Americans. The threats of taxing foreign goods also has been more about fair trade deals that put the taxes the same or in line with what U.S. companies get taxed when sending goods into foreign countries.

The House Republican plan actually was aimed at taxing all goods coming into the country, again with a 20% rate being most frequently mentioned. The Ways & Means Committee chairman, Republican Kevin Brady of Texas, has explained the border tax as ending the “Made in America Tax” to help pay for a broader reform on U.S. corporate taxes.

Now it is time to consider that not all the politicians in the House and Senate are very astute about the economy. If the official unemployment rate is under 5% and if prices have been stable for years, how are they going to be able to sell this to their constituents if a border tax will drive up consumer prices for many of the goods they buy?

Forbes already had been against a border tax, but the week of February 10 brought more vocal criticism. Forbes appeared on CNBC and said the Republicans proposal as it stands was a crazy tax that would cost American consumers over $100 billion per year. Forbes already had issued an open letter to President Trump about not letting the congressional Republican plans wreck the president’s plan for lower taxes.

Also during the week of February 10 came criticism of the border tax from Georgia Senator David Perdue, also a Republican. He has said that the border adjustment tax will hammer American consumers, while acting to shut down economic growth. He also has suggested that a border tax is proven to grow government.

In the week of February 3, President Trump’s economic adviser Gary Cohn also said on CNBC that all options for corporate tax reform were being considered. While Cohn said that the border adjustment tax was one of the considerations, he was adamant that no formal decisions have been made regarding how to overhaul the tax system.

24/7 Wall St. pointed out back in mid-January that the border tax was already losing momentum long before it could come up for a vote. Data from the Census Bureau and U.S. Department of Commerce showed an annual trade deficit of more than $550 billion annually from 2006 to 2015, but the U.S. trade balance for goods has had an average trade deficit of more than $730 billion per year over the same 10-year span. Other than higher prices for consumers, what else might happen when you slap on a would-be 20% tax on those goods?

There is already a press from companies in the American Made Coalition for a border adjustment of some sort, while the group Americans for Affordable Products is against a border tax. It is also important to recall a recent Wall Street Journal interview in which President Trump said that the border adjustment tax in its current effort is just too complicated. He said:

Anytime I hear border adjustment, I don’t love it. Because usually it means we’re going to get adjusted into a bad deal. That’s what happens.

William Dudley, President of the Federal Reserve Bank of New York, recently spoke at the National Retail Federation in New York City. Dudley is well regarded among economists inside the Fed due to his proximity to the financial markets, and he warned that a cross-border tax could change the value of the dollar while raising import prices on goods and services.

The ultimate fate of the border adjustment tax has yet to be seen. What is becoming more obvious is that tax plan changes probably are going to need to be made simpler, and the proposed border adjustment tax is far from simple.

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