WASHINGTON, Jan. 27, 2017 - President Donald Trump has thrown another curve ball to Congress on tax reform and trade. As he flew back to Washington yesterday from a speech in Philadelphia at the congressional GOP retreat, his spokesman raised the idea of paying for the wall with Mexico with a 20-percent tax on imports. 

What Trump is talking about is the idea of border-adjusting the U.S. corporate tax. The tax would be applied to imports but not to exports. The tax is designed to boost U.S. exports and raise the revenue needed to pay for cutting tax rates, repealing the estate tax and other benefits in the House Republican tax reform plan. 

Trump shift gets mixed reception. Trump had earlier said he didn’t like the border adjustment idea. But Rep. Kristi Noem, a member of the House Ways and Means Committee, welcomed Trump’s apparent shift, even if might mean diverting some of the revenue to wall construction. 

“If we don’t have the (border adjustment) as part of the tax reform legislation, we will have to come up with all kinds of pay-fors and changes and still not be competitive on a worldwide market,” the South Dakota Republican said.

However, some senators took to Twitter to raise concerns about the proposal, and the White House cautioned that the border tax was one of several options being considered. 

“Tariffs are a tax on American families,” wrote Sen. Ben Sasse, R-Neb. The Senate GOP whip, John Cornyn, R-Texas, said there were “many unanswered questions about proposed ‘border adjustment’ tax.

Corporate giants endorse tax reform. The tax plan is a major priority of House Speaker Paul Ryan, who wants to get it through the House before the August recess. 

The House plan received a boost yesterday from an alliance of major corporations, some of whom have major food and agriculture business, including Dow Chemical and DuPont, which are in the process of merging; Eli Lilly, parent of Elanco Animal Health; General Mills, Kellogg and PepsiCo.

Farmers wary of funding enforcement surge. The House speaker says that the White House will be sending a supplemental spending bill to Congress to start construction of the wall. There’s no word yet on whether the bill would include funding for hiring the 10,000 immigration enforcement agents called for in the executive order he issued on Wednesday. 

Congress is likely to get some pushback from farm groups on that proposed enforcement surge. 

“We’ll be having conversations and making sure they understand our workforce and any impact it may have on our workforce,” says Kristi Boswell, an immigration policy specialist with the American Farm Bureau Federation.

The extra spending that Trump wants is likely to have strong support from many conservatives. The chairman of the House Freedom Caucus, Mark Meadows, R-N.C., said he expected Congress to fund Trump’s request. 

Trump: Only “one-on-one” trade deals. Trump used his appearance in Philadelphia to pledge to go to work on negotiating a series of bilateral trade agreements to replace the Trans-Pacific Partnership. 

“Believe me, we’re going to have a lot of trade deals. Mitch, don’t worry about it,” Trump said, referring to Senate Majority Leader Mitch McConnell.

There is significant concern in the GOP ranks about Trump’s trade policy, reflecting the anxiety in agriculture and other sectors that depend on exports. The concern was hardly dampened by Mexican President Enrique Pena Nieto’s announcement yesterday that was canceling next Tuesday’s planned meeting with Trump.

Trump welcomes British PM in Washington. British Prime Minister Theresa May will visit Trump at the White House today and talk about doing a bilateral trade deal, among other issues. In a visit to the GOP retreat yesterday, the prime minister gave a nod to the anxiety about foreign trade that was a big part of Trump’s campaign.

Any US-UK trade deal “must work for those who have too often felt left behind by the forces of globalization,” she said. 

Trump puts breaks on GMO disclosure rule. Shortly before President Obama left office USDA sent a measure intended to help the department move ahead with writing regulations for the new GMO disclosure law. The Trump White House, however, has sent the measure back to USDA for further review. 

At issue is an “advance notice of proposed rulemaking” (ANPR) that lays out the issues the department has discretion over as it writes the regulations. “The idea was to make the public aware of” of those issues “ahead of public comment and discussion,” a former USDA official says. 

A spokesman for the Agricultural Marketing Service declined comment on the White House action. But the decision to send the ANPR back to USDA shouldn’t be a surprise, given the importance and political sensitivity of the coming rule, which will determine what products and bioengineering techniques are subject to the disclosure requirement. 

USDA reports historic drop in food prices. Supermarket prices dropped 1.3 percent last year, the first such decline since 1967, USDA says in its monthly report on food prices. The department’s economists believe there will be little or no increase in prices this year. 

Supermarket prices have historically increased on average by more than 2 percent annually. The biggest declines last year were in beef, pork, poultry, eggs and dairy products, but there were declines or only modest increases in other foods as well. Fruit and vegetable prices were up less than 1 percent. 

He said it. “This is an unconventional presidency. … That’s something we’re all going to have to get used to.” - House Speaker Paul Ryan

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