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Peter Navarro: 'No question' we need border tax

Peter Navarro, director of President Donald Trump's new National Trade Council, argued in favor of the border adjustment tax Friday on CNBC's "Power Lunch."

"There is no question that we need a border adjustable tax of some kind, one that has to be flexible," Navarro, a harsh China critic, said.

"We as an economy cannot succeed putting our people back to work in Ohio and Pennsylvania, Michigan and Indiana if those countries keep treating us unfairly with respect to that VAT tax system," Navarro said. "The only way to do that is by coming up with some system of border adjustable tax which is flexible."

The longtime economics and public policy professor criticized nations like Germany for implementing a value added tax on imports that makes U.S. goods less competitive. The only way to stay competitive, he argued, is to respond with a border tax of our own.

Opponents of the tax argue that it will drive up costs for the American consumer. Navarro agrees, but contends that the small increase in prices will be outweighed by more jobs and higher wages.

Navarro has long been a critic of the practice of "dumping," or flooding the U.S. market with cheap goods to push out competition. The worst offenders, he says, are "China and China and China."

"Would you rather have cheap subsidized, illegally subsidized goods dumped into the Wal-Mart and not have a job and not have your wages go up in 15 years or would you like to pay a little bit more — not much — a little bit more, have a job and have your wages going up?" Navarro asked. "I think the American people are going to make that choice."