In a cunning move, Trump’s proposal has exempted revenues generated from exports while proposing to impose a 20% tax in imports. This essentially pits exporters against importers and unless this entire line of reasoning is revisited, in the long run the U.S. economy could be headed for the doldrums.
The CEOs of some the United States’ largest retailers, including Best Buy Inc and Target Corp, are headed to Washington to make their case against U.S. President Donald Trump’s controversial border tax which could potentially hurt consumer prices as well as ruin the retail industry and the lives of its employees.
Although the full list of participants remains as yet unknown, the bosses of 8 retail businesses, which includes the CEO of Autozone Inc and Gap Inc is set to meet with Kevin Brady, chairman of the tax-writing House Ways and Means Committee, on Wednesday along with members of the Senate to make their case against this controversial proposal.
This will be the very first time that the CEOs of these big businesses will descend on Washington, as a group, and plead their case to kill the import tax proposal.
Their input could be crucial since U.S. President Donald Trump is almost done with finalizing his own tax plan which he is likely to unveil in the coming weeks.
This development comes in the wake of Speaker Paul Ryan and Brady leading a House Republican push to slash corporate income tax to 20% from 35%, impose a 20 percent tax on imports while totally eliminating export revenues from taxable income.
Companies that are reliant on imports, such as automakers, refiners and retailers, are naturally a peeved lot since the proposal will now apply a heavy tax on imports which will, in all totality, outweigh the benefits of a lower corporate tax.
The trade group is leading the industry’s effort to oppose House Republicans’ proposal for a border adjustability tax. The coalition has more than 120 companies and trade organizations in its alliance.
The prospect of the imposition of a big import border tax on some of the largest companies in the country has resulted in what is likely to be a signature development in the Trump era: U.S. companies have been pitted one against the other, with some of the country’s major exporters, including, Pfizer, Boeing Co and General Electrics Co forming their own coalition to support the big import tax.
Retailers have been it amply clear that imposing a 20% tax on imported goods will significantly boost consumer prices and erode most of the profits they currently make.
Retailers are essentially staring at huge crater-like dents in their operations which could potentially bankrupt them in the long run. Nearly all of the United States’ clothing, footwear electronics, food (such as coffee and palm oil) are imported.
Best Buy, the largest U.S. electronics retailer, has circulated a flyer to lawmakers, which highlights an analyst’s forecast that the imposition of a 20% tax will wipe out its $1 billion projected annual net income and force it to make a $2 billion loss.