CEOs from eight national chains, including Best Buy’s Hubert Joly, Target’s Brian Cornell and JCPenney’s Marv Ellison, met with President Trump yesterday to discuss a range of topics impacting merchants, including tax reform and infrastructure spending.
But uppermost on their minds was a House Republican plan to impose a 20 percent tax on imports, which could upend multiple industries including consumer electronics and major appliances.
According to the National Retail Federation (NRF), a trade association, the proposed $1 trillion “border adjustment” tax would raise prices for consumers and cost the country more jobs.
The measure “is going to add a new national sales tax on the price of everything that consumers buy,” NRF president/CEO Matthew Shay told CNBC. “I don’t think that’s what the voting population voted for last November. There are other ways to get tax reform done.”
NRF government relations senior VP David French described the initiative to Fox Business as “a hidden consumption tax, a hidden national sales tax. It will increase the cost of everything consumers buy.”
French said the proposed import tax — part of a larger proposal by House Republicans to cut the corporate tax rate from 35 to 20 percent — would cost the average U.S. family an extra $1,700 a year in higher prices for TVs, washers, clothes, food, gasoline and cars.
Some import-dependent retailers could see their tax bills grow three to five times larger than their profits, NRF warned, putting some companies out of business, while even domestic manufacturers using foreign-made components could be impacted.
Speaking for the CEOs, AutoZone chief exec Bill Rhodes described the presidential parley as “a very positive and productive discussion” about retail’s key role in the U.S. economy. “We look forward to carrying on the conversation with the president and his team.”
Trump, who had previously described border adjustment as “too complicated,” didn’t address the issue in his pre-meeting comments, pointing instead to his executive action to reduce regulation, and noting that “we’re doing a massive tax plan” that will “simplify greatly the tax code.”
The president also described Best Buy as “a great store.” (Watch meeting, below.)
The retail execs went on to meet with the chairmen of Congress’ two tax-writing committees, Rep. Kevin Brady of the House Ways and Means Committee, and Sen. Orrin Hatch, who heads the Senate Finance Committee.
Separately, Federal Reserve Chairwoman Janet Yellen told lawmakers yesterday that “there’s great uncertainty about how in reality markets would react” to border adjustment, the Washington Examiner reported. “It’s very difficult to know just what would happen.”
Hat tip to the NRF.