One conservative group produced colorful flow charts warning millennials that a "border adjustment" tax proposed by House Speaker Paul Ryan would raise prices on "the Jose Cuervo tequila that's in your happy hour margarita."

Three days later, a second conservative group kicked off a lobbying campaign saying the proposal would amount to a $1.2 trillion tax on senior citizens and the working poor.

The next day, still another group weighed in, issuing a news release that highlighted how Hispanics would be "among those hardest hit" by the new tax on imports.

All three of those organizations share a common lineage: They are part of the political network overseen by Charles and David Koch, the billionaire conservative businessmen. Now they are among a host of conservative organizations mounting a campaign against a new tax on imports proposed by House Republicans that is supposed to be a centerpiece of the Republican tax overhaul effort.

Their opposition threatens to create yet another rupture with President Donald Trump, some of whose advisers see the provision as a critical way to bring about tax overhauls while protecting U.S. manufacturers.

Much like Trump's failed effort to repeal the Patient Protection and Affordable Care Act, the import tax is dividing conservatives, the business sector and some of the deepest-pocketed groups funding conservative politics.

Along the way, it is exposing the broader ideological divide between nationalist policies embraced by Trump and the traditional small-government movement that his election ejected from the driver's seat of Republican policymaking.

"Trump ran on a different set of economic issues than traditional conservative Republicans have," said Stephen Moore, a fellow at the Heritage Foundation who favors the border tax on intellectual grounds, but said he had come to see it as a "poison pill" for broader tax changes.

"The baton has been passed on from Reagan to Trump," Moore continued, "and there's no doubt he ran on a much more populist economic message."

The idea of a border adjustment tax has percolated among academic economists and in think tanks since the 1970s, as the United States has considered ways of harmonizing its tax code with countries that use value-added taxes.

Central to the plan is a provision that would tax imports at a rate of 20 percent while exempting exports from taxation. In theory, that would buttress domestic manufacturing, make U.S. products more competitive with foreign goods and encourage U.S. companies to bring home cash they have been parking overseas.

"It is a simple and elegant way to get good tax compliance," said Douglas Holtz-Eakin, a Republican economist and president of the right-leaning American Action Forum, a nonprofit tied to a super political action committee that backs House Republicans.

The Koch network and groups like the Club for Growth, which for years have targeted what they call "crony capitalism" in Washington, have opposed the border tax as an unnecessary tax increase and a form of favoritism that would hurt the economy. But Trump and his team have pledged to target what they see as a more insidious kind of cronyism, including unfettered free trade that some Trump advisers say benefits wealthy elites at the expense of U.S. workers.

The dispute echoes Trump's battles with his party last year, when the Club for Growth, a group of wealthy conservatives that backs anti-tax candidates in Republican primary races, financed a multimillion-dollar advertising campaign against him. The Koch network, uncomfortable with Trump's proposals on trade and immigration, sat out of the presidential election entirely, turning its advertising dollars and activists to down-ballot races.

The Koch-funded group Americans for Prosperity is calling on Trump to rely more on spending cuts, rather than on a border adjustment tax, to finance the tax overhaul. The group's list of proposals include indexing Social Security benefits to inflation -- a popular idea in conventional conservative circles but one that could violate Trump's campaign pledge to protect the program's beneficiaries.

Philip Ellender, a top executive at Koch Industries, said in an interview that the company was lobbying against the new tax out of principle, not for profit.

"In the short term, Koch would profit handsomely from it," Ellender said. His summary of the company's case against the tax: "It would stifle free trade, it picks winners and losers, and it raises prices on consumers so that corporations can get a tax break."

A Section on 04/02/2017