Walmart, Target and Other Retailers Are Teaming Up to Fight Trump’s Border Tax

Feb 01, 2017

The retail industry and has stepped up its pressure on the Trump administration not to push its proposed so called "border adjustment tax" on imports it says will cost everyday Americans hundreds of dollars a year.

Major retailers, notably Walmart (wmt), Target (tgt), and Best Buy (bby) are among the more than 100 retailers in the new Americans for Affordable Products group, which has the backing among others of the National Retail Federation and the Consumer Electronics Association and whose creation was announced on Wednesday. The group also includes food and beverage and automotive companies and trade organizations.

The BAT is a part of the U.S. House Republican tax reform proposal, that would impost a 20% levy on imported goods. The tax, which aims in part to finance President Trump's proposed wall along the Mexican border could be particularly painful for retailers: Some 97% of all clothing and footwear sold in the U.S., and more than 90% of electronics, are imported. Items like sugar, coffee and many foods could also be hit.

"There are plenty of taxes already on hard working Americans and the retailers that serve them, and higher prices just add to that burden," NRF CEO Matt Shay said in a statement issued by AAP.

Large retailers have been muted on the issue, preferring not to take on the president directly, mindful of his willingness to use his Twitter account to pressure U.S. companies to bend to his will. Last week, Target's CEO, Brian Cornell, lobbied lawmakers himself. But generally, retailers have let the NRF and others speak on their behalf.

The Congressional Republicans' plan wants to eliminate tax incentives that spur American companies to move overseas, reduce the corporate tax rate to 20% from 35% with a view to spurring production in the U.S. Trump himself has suggested he finds parts of the tax plan complicated.

The NRF has also pointed out that retailers cannot easily or quickly switch to domestic sources because they don't exist for many goods bought by U.S. consumers. The group estimates that if passed, the BAT will cost American households up to $1,700 a year . What's more, with soft sales at many chains and higher labor costs, many retailers' profit margins could take massive hits.

Other members of the AAP group include the like of luxury conglomerate LVMH, Nike (nee) and Dollar General (dg).

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