The Trump administration has dropped any support for a so-called border adjustment tax on imports, reports Kate Kelly for The New York Times.
The tax was intended to be the keystone of a tax "reform" proposal developed by Republican leaders in the House of Representatives. But it faced immense pushback from influential companies including Walmart and Toyota.
If enacted, a border adjustment tax would have effectively imposed significant levies on billions of dollars of imported goods. Retailers in particular would have been hard hit, as products ranging from tires to T-shirts, which are imported from overseas, would have suddenly cost more. Automakers and other manufacturers that rely heavily on foreign parts and supplies would have also been hit.
Since Trump is about to announce on Wednesday cuts in corporate taxes and individual taxes without any cuts in net government spending, it remains to be seen how he will fund the new gap.
It is possible he could sneak in other taxes, allow the budget deficit to explode or generate revenue from imports on an ad hoc basis via tariffs.
It's possible it will be a combination of all three.