A meeting was held on Wednesday between U.S. President Donald Trump and executives from major retailers, including Gap CEO Art Peck and J.C. Penney’ CEO Marvin Ellison, to discuss a proposed Republican plan for tax reform.
At the heart of the meeting was the so-called “border adjustment tax,” which will effectively create a new tax on imported goods (but not made-in-American products) and is estimated to raise about $1 trillion in tax revenue (which would help pay for lowering the corporate tax rate to 20 percent) The tax is expected to lead to higher prices on many products, and those increases will be passed on to consumers.
President Trump has not explicitly supported the tax as of the yet, and has continually spoken of his determination to promote economic growth. Nonetheless, many retailers are concerned that the new tax will lead to a decline in shopping, which, in turn, could also lead to major job cuts in the retail sector.
Indeed, in advance of the meeting, the National Retail Federation tweeted that the proposal was “tricky and unproven” and that the tax could cost the average American household up to $1,700 a year, Moreover, the NRF estimated (through a survey by Ernst & Young) that one-parent households could see their apparel and footwear bills increase by $271 a year, while the average two-parent family with children could see their apparel costs (including shoes) increase by $437 a year.
“Retailers are in Washington meeting with both members of Congress and President Trump because they are on the front lines of the consumer-driven U.S. economy,” said David French, vice president of government affairs for the NRF. “Currently, the House proposal for a border adjustment tax would drive up prices paid by American consumers, significantly impact the consumer spending that makes up two-thirds of our nation’s economy and threaten tens of millions of jobs supported by the retail industry. Retailers want to work constructively with our elected leaders for true, pro-growth tax reform. We are grateful for the opportunity to engage with Congressional leaders and the President to achieve that shared goal.”
Following the meeting, Bill Rhodes, chairman of The Retail Industry Leaders Association (RILA) and president and CEO of AutoZone stated: “Today, we had a positive and productive conversation with President Trump about the important role the retail industry plays in our national economy. We stressed the importance of taking a thoughtful approach to tax reform for both individuals and corporations. The retail industry is the nation’s largest private sector employer providing and supporting more than 42 million American jobs. The President understands we support pro-growth policies that we believe will lead to greater domestic investment. We look forward to working with the President and his Administration on the issues of importance for our industry, our employees and American working families, who by and large are our customers.”
Another organization, Americans for Affordable Products, released their own statement: “Today’s meeting between executives and President Trump focused on pressing issues confronting American families: economic growth and domestic investment. Americans for Affordable Products represents the nation’s largest employment sector supporting more than 40 million jobs or nearly one in four employed Americans, and we stand ready to work with the new administration in advancing pro-growth policies that work for all Americans, particularly middle-income households.”