Economists warn Americans would foot the bill for Mexico's wall, under Trump's tax proposal

Local business owners fear they would go bankrupt
Posted at 6:10 PM, Jan 27, 2017
and last updated 2017-01-27 18:25:11-05

Economist are blasting President Donald Trump's proposed tax on Mexican imports. They're warning it's American consumers who will end up paying the price. The tax is proposed as a way to pay for the wall on the U.S.-Mexico border.

Manuel Herrarte felt his heart drop when he heard about the proposed 20 percent tax on Mexican imports.

"I instantly knew this would be a disaster and this is what is going to happen," he said.

He's works at Acapulco Mexican Taqueria and Grocery, in Tampa, where nearly 100 percent of what they sell comes from Mexico.

He says a tax on our nation's third largest trading partner would be the end to his small business.

"We would have to raise prices or this business goes bankrupt," said Herrarte.

He fears, should this tax come to pass, it would force his small business to close within a year.

ABC Action News reached out to an economist to see if his fears were legitimate.

"Economically, this is insane," said Abby Blanco, Ph.D. in economics. She's also an assistant professor of economics at the University of Tampa. She says ultimately it's American consumers who will foot the bill. As businesses will more than likely hike up prices.

"This policy would be absolutely disastrous," she warned.

Mexico ships $295 dollars worth of products to the U.S., every year. Including produce that we can't grow in America, also, cars, medical supplies and appliances.

About 93 percent of all avocados sold in the U.S. come from Mexico. Likewise the U.S. spends $1.3 billion on Mexican beer every year. Meaning, a $1 avocado would go to $1.25 and a six pack of beer would go from $10 to $12.

"20 percent doesn't seem like much but when you consider the volume," said Blanco, "20% tax on that is remarkably significant."

Right now, Herrarte is keeping a close eye on the proposal and says his future is tied to its outcome.

"We would end up unemployed and I don't know what would happen after that," he said.

Blanco explains Trump can impose a temporary tax for up to 120 days. Then, he'll need congressional approval.