Former Rep. Kevin Brady (R) Texas Talks Tariffs, Budget Plan

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The tariff is a tax increase.

It's a tax that applies to imported goods and the United States, so it burdens US importers.

There's no way that it's a tax cut.

It increases revenue, it increases the tax burden in the US economy.

Rookie York in the Tax Foundation on the early edition of Balance of Power yesterday talking about how tariffs might impact impending tax policy. Because you know, we're doing it all at once right now in Washington, joining us as Kevin Brady, former US Congressman from Texas, spokesman for the Alliance for Competitive Taxation, of course, former chair of the House Ways and Means Committee.

It's great to see you in town.

I don't know if you're hearing anything on what we're going to learn tomorrow, but everybody's trying to get a sense of what this announcement will be from President Trump. Whatever it is will help the color the debate around taxes. Right We've started this whole process talking about tariffs helping to raise revenue to cover the cost of tax cuts.

Will that be fulfilled tomorrow?

You know, likely, not necessarily. I think people are hoping that tariffs will be short and uses leverage to bring countries to the table with better resolution on issues, including lower tariffs. I think people are hopeful it's not a high universal tariff that is permanent nature, which will cause.

A lot of economic damage.

But I think the point is for all the uncertainty that's around tariffs seems to be in every sector and lots of families around the country.

It really drives home the.

Need for certainty within the tax coat. And I think really the pace that the Houses Senate are moving forward on recognizes as sooner they get this done, the better. They've still got some big hurdles. This is a hard This is a hard job in the best of times. With the near zero majority in the House, a higher degree of difficulty in a bigger way depths and depthsits matter. So yeah, there's a lot of challenges ahead. But I

But are they moving in the same direction, rowing in the same boat to an extent that will allow this process to move quickly?

Ultimately they will, I'm confident they will. But the Housan, you know, they are different personalities and they move different.

Ways and different rules.

So I think the Senate this week looks to be sort of advancing their idea. I think some of us thought that the next step would be the two houses have reconciled sort of the design. What I always said was reconciliation was the runway you landed tax reform on. So they're definitely two different architects, different designs at this point. Ultimately, I think important for the Senate to act in advance like the House has. But as sooner they they in the White House get on the same page, the better.

You're in an interesting moment here, as you've been spending time in Washington now for months, getting closer to the finish line to extend or make permanent the Trump tax cuts.

That's been your charge.

But she heard Eric Yorke's comment when we're coming into this this conversation, you're taking that amount away from individuals and businesses in the private economy. By any definition, this is a tax increase. So we could be in a world where they cancel each other out.

So I hope not.

You know, I actually think tariffs are a tax, but worse economical because not only do they drive up prices, really distort the economy and slow it down. In most cases, it invites retaliation on our made in America workers, you know what I mean, in a big way. And as you know, it's not enough to buy American. You need to sell American all throughout the world. Tens of millions of jobs depend upon our ability to do that successfully.

A bit of a honeymoon here.

You know, I mean to unveil this strategy, which we're going to see a lot of it tomorrow. But they're very nervous about the impact on prices, the economy, and their workers, especially because our trade agreement with Canada and Mexico, the most consequence trade agreement on the planet, has worked beautifully,

Clearly, sir, you are a big advocate for the USMCA. When you hear the language now coming out of Canadian Prime Minister Mark Karney about this having fundamentally altered the relationship between Canada and the US, do you think that's just posturing because he has to put up a show of force against these policies or is this actually going to be hard to come back from.

It's going to be difficult to come back.

This is such a strong partnership economically and integration has worked for all of our strengths. It's tough to hear about, you know, being named the fifty first state.

Or sort of the rhetoric around this.

It's having an impact in both of our borders as well. So I think the sooner that we can come to the table and work through these issues. Certainly, Mexico can agreement with America is almost near zero tariffs on most products, pretty low barriers. Not perfect. You know, we've had trade tensions. We have to resolve those, but we should never forget because of our strengths. Putting them together, we compete better

You mentioned the thin Republican majority in the House right now. I suspect that's when you couldn't have imagined while you're there. There are a couple of special elections in Florida today, House races where it appears that Republicans will hold two seats, one from held by Matt Gates, the other Mike Waltz, the President's national security advisor. But that's sixth District race, the Waltz seat, the district Donald Trump won by more

Do you see it that way? Or are we reading into this too? Yeah?

I don't great question. I don't don't know. I don't know that race quite that will have been following it closely like everyone else has. So I just think these special elections get a lot of attention, and then when they don't really you know, come out, they're quickly forgotten.

You know what I mean? That's right, you know they tend to work back to the norm.

I think that'll happen again, but sure, I think Republicans and Democrats from paying attention every election at this point.

Well, and there won't be a third special election for at least next top president was a little bit concerned about holding onto that one. Therefore he's keeping her in the House rather than you an ambassador. But an issue in her district in New York, really all of New York and other high tax states that we often talk about with you is the salt cap. And Bloomberg is reporting today that they're looking at Republicans in Congress are looking at raising it to twenty five thousand dollars from

Well, it should be, because it's a huge increase.

I mean, both dollar wise and the impact on the.

Tax bill itself is going to be significant. It is certainly a huge expansion of what is basically one of the biggest subsidies who've gotten the tax coat, you know, on the individual side, of that, and so I would think for the high tax states, again, who's most of taxpayer's overwhelming got a tax cut, that is a huge number, I think, probably bigger than I thought it would be, frankly, but I think it's going to be very careful, very important for them to arrive at that consensus number between

For There are a few stories that we could ask you about that tend to get more attention from our viewers and listeners are subscribers at Bloomberg. The salt story gets a read spike every time it hits the terminal here. Does that number sound like something that will bring members of the Salt Caucus over because you can explain they're needed to pass any final bill.

Right.

So, I think given that there are a number of Republicans who believe the salt tax numbers should be zero, that everyone should just pay their own state and local taxes, that would be that would be a big give to I think the publican members from the high tax states. So you know, if that is the number that would be, that would be a huge win for them.

I don't know that's the case.

You hear about a doubling to twenty thousand and I guess one question is that twenty five thousand four all incomes or for some You know, there's lots of ways to sort of target those things because so much the salt.

Goes to the million dollar household.

So yeah, still more details I think need to be known, and.

The details do matter.

Kevin Brady, former chair of the House Ways and Means Committee, and spokesperson for the Alliance for Competitive Taxation, Thank you so much, as always for joining us.