WASHINGTON — President Trump, at loggerheads with congressional Republicans over the best way to overhaul the tax code, may have come toward Capitol Hill on a key sticking point, the way imports should be taxed, after a meeting at the White House on Thursday, said Representative Kevin Brady, chairman of the House Ways and Means Committee.
Congressional Republicans are trying to nudge Mr. Trump away from one of his big campaign promises: a 35 percent tariff on any product made by an American company at an overseas factory, then imported into the United States market. Success in getting the president off that applause line will be critical to getting tax legislation passed in 2017 and fulfilling a central promise that Republicans have been making to voters for years.
At the same time, both sides want to end what they see as a penalty on American exporters, who compete with overseas factories that can game the system for lower tax rates. “Like us, they’re just not satisfied with a tax code today that favors foreign products over U.S. products, and I think they are looking carefully at ending that ‘made in America’ export tax so that we can compete around the world,” Mr. Brady, Republican of Texas, said of the Trump administration.
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At the White House meeting, Mr. Brady was joined by Senator Orrin Hatch of Utah, chairman of the Finance Committee, Senator Ron Wyden of Oregon, the ranking Democrat, and Representative Richard Neal of Massachusetts, the ranking Democrat on Ways and Means. The conversation with Mr. Trump also focused on trade and renegotiating the North American Free Trade Agreement.
Mr. Brady’s plan would also essentially levy a 20 percent tax on all imports, to create revenue and spur domestic production and exports — a notion Mr. Trump has said is overly complicated. The prospect of such a sweeping change has stirred fears among big companies in the retail and energy sectors, which rely heavily on imports, and created a backlash that could scuttle plans to slash tax rates without adding to the deficit.
The split within corporate America over the shape of a tax code rewrite was on display Thursday as Freedom Partners, an advocacy group funded by the libertarian billionaires Charles and David Koch, called on Republicans to “scrap” the border tax idea, which it warned would mean higher prices for consumers. Also Thursday, a new business group, the American Made Coalition, began to rally support around the tax plan championed by Mr. Brady and the House speaker, Paul D. Ryan of Wisconsin.
Mr. Brady said he was confident that the White House and worried companies were starting to come around. “The more people learn about why we need to tax equally within the U.S., at this new low business rate of 20 percent, they come on board in gangbusters,” he said in an interview.
Mr. Brady is still engaged in negotiations and salesmanship. He said on Thursday that although there should be no exemptions for importers of any kind, Republicans were open to working with businesses that rely heavily on imports to develop ways to ease new tax burdens. He also said the United States did not intend to flout the rules of the World Trade Organization.
House Republicans will also need to hash out their final tax plan with Republicans in the Senate, and rumblings this week from Mr. Hatch suggested that they might not be on the same page. Speaking at the Chamber of Commerce on Wednesday, Mr. Hatch said he had concerns about the border tax and that the Senate’s legislation would almost certainly end up looking different from what the House produces.
Mr. Trump and his staff have continued to publicly float provocative ideas, such as taxing companies that move their manufacturing operations abroad and sell products in the United States, and taxing products from Mexico to pay for the construction of a wall along the border. “The president is clearly laying out a bunch of different options that he could use, including those tariffs,” Mr. Brady said, suggesting that his plan would be more “pro-growth.”
As for using revenues from the tax overhaul to pay for the wall, Mr. Brady insisted that such projects are not his focus. “Our focus right now is all on growth within tax reform,” Mr. Brady said. “Discussions on how new revenues are spent I’m sure will be part of future discussions.”