Trump's border tax could damage the US a lot more than a wall | Kenneth Rogoff

Republican plan aims to close trade deficit and raise revenue - but it could hurt importers and spark short-term job losses

In many ways, the Republican party's plan to implement a "border adjustment tax" in the US is a virtual complement to the physical wall Donald Trump plans to erect on the Mexican border. Although the border adjustment tax has not seeped into public consciousness in nearly the same way as Trump's wall, 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% on imports, and to provide tax breaks worth a similar amount on exports. Most populists' gut reaction is that this must be fantastic for US jobs, because it discourages imports and encourages exports. Unfortunately, as many have pointed out, there is a loose screw in this logic, which is that the US has a floating exchange rate.

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