> increases the tax on otherwise cheap foreign import like from China The domestic currency is supposed to appreciate in value in proportion to the tax, so for

> increases the tax on otherwise cheap foreign import like from China The domestic currency is supposed to appreciate in value in proportion to the tax, so for example 1 US dollar buying 20% more Yuan, which cancels out a 20% tax (although I have to admit this is not as intuitive as the other parts, so I'm trusting the economists to do the math there). I'm not sure if the Yuan specifically is a good example, since the Chinese government controls the exchange rate politics might be more important than economics there. > and domestic producers for domestic market If you have a pure domestic business, wouldn't you just deduct your domestic expenses and pay tax on what's left over? That's basically what happens now, so I don't see how it would make a difference. > A multinational will always be able to shift franchise fees, IP property leases, etc. so that would become "domestic expenses" where it will reduce the taxes most. You could set up a domestic subsidiary, but now that subsidiary will have to pay the tax. If it's not a domestic subsidiary, then you have to pay the tax (since you can't deduct it). I get that in the current system it's very easy to do these things, but can you explain in a little more detail how this would work with the border tax?