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In many ways, the Republican Party's plan to implement a "border adjustment tax" in the United States is the virtual complement of the physical wall President Donald Trump plans to erect on the U.S.-Mexican border. Although the border adjustment tax has not seeped into public consciousness in nearly the same way as Trump's physical wall has, it could end up affecting the average American a lot more – and not necessarily in a good way.On the surface, the basic idea is to slap a tax of, say, 20 percent on imports, and to provide tax breaks worth a similar amount on exports.A stronger dollar – a likely result of imposing a border adjustment tax – makes it cheaper for Americans to buy imports (because a dollar buys more foreign currency); conversely, a stronger dollar makes U.S. exports more expensive to foreigners.While that is a vast improvement over the 6 percent of GDP deficits the U.S. was running a decade ago, the U.S. still imports considerably more than it exports, meaning the government stands to collect far more revenues from its 20 percent tax on imports than it would have to give in tax breaks to exporters.
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