Little appetite in the U.S. business community for border tariff, says Jim Carr

Natural Resources Minister Jim Carr says there appears to be little appetite in the U.S. for a new border adjustment tax on Canadian goods.

Carr has been in Washington since Tuesday meeting with U.S. Secretary of Energy Rick Perry and Environmental Protection Agency Administrator Scott Pruitt. He's also met with other U.S. legislators, industry leaders and unions as part of a Canadian charm offensive on trade.

Carr spent several days in Houston earlier this month talking to energy industry leaders at the annual CERAWeek conference. 

"The subject of the border adjustment tax did come up, and there was very little support for it," Carr said to reporters in a conference call from Washington.

"It's not just that people here are expressing an agreement in principle with free trade. It's that they are specifically saying that a border adjustment tax would not move along the interests of Canada and United States in the energy market, and that was expressed to us with any number of people with whom we met."

Some Republicans in the U.S. Congress have been pushing the idea of a border adjustment tax on imports as a way to stimulate U.S. production. But Carr said the idea is very unpopular with the business people he's met.

"Most specifically, the United States Chamber of Commerce. I spent some time with them yesterday and they are absolutely unequivocal," said Carr. "And in our conversations with senior executives in Houston, we met with about 11 of them, that was the same message from them." 

But clearly aware of heated politics over the tax, Carr refused to name the U.S. politicians who are against it.

"I don't think it would be appropriate to talk about the detail of our conversations with senators and congressmen, but I can tell you with confidence there was general and, I would say, deep support for the free flow of goods," he said. 

Border tax far from certain

Stephen Allen Schwarzman, chairman, CEO, and co-founder of the private equity firm Blackstone, a global private equity firm, was in Montreal Thursday talking to Quebec Premier Philippe Couillard about buying more electricity from Hydro-Québec for New England.

At a post-meeting news conference, Schwarzman, who also chairs Trump's strategic and policy forum of respected American business leaders, said a border tax is far from certain.

"It's designed to create more activity in the United States," said Schwarzman. "I think it's got a number of members of our upper house, the Senate, who are concerned about that, and as you saw from the health-care bill in the United States, nothing is certain, and the border tax has a lot of complexity that goes with it."

"So it's one of those 'let's see what happens,'" he added. "But there's a chance it doesn't make it, certainly on the scale it was originally anticipated."

Backlash against tax

International trade expert Laura Dawson agrees that the border adjustment tax appears to be losing its appeal in Washington.

"It looked kind of simple and clean and, you know, 'We'll be able to put this tariff up at the border and we'll be able to get money from foreigners and that will help us pay for all of our domestic commitments, and it will be win-win,'" said Dawson, who is director of the Canada Institute at the Wilson Center in Washington. 

But Dawson said there has been a lot of pushback from businesses and the agriculture sector, which worry a tax would result in matching tariffs on their exports to Canada.

"As a result of that kind of pressure, it seems to be that the administration is backing away," she said in an interview with CBC News.

Border tax would nullify NAFTA

Dawson said there was a strong hint the border tax was being reconsidered in a draft proposal being circulated in Congress Thursday showing the Trump administration is looking for only limited changes to the North American Free Trade Agreement. 

She said moderate changes to the trade agreement wouldn't be possible if a border adjustment tax was being considered.

"It would nullify NAFTA."

However, she said, it's hard to predict which way the new administration will go.

"Never say never, because it is an attractive fundraising instrument for a government that's in need of cash in order to fund a lot of new initiatives. So I wouldn't kill it yet. It's probably on its way out, but we can't be sure."