Worries about tax-code changes resurfaced as retailers wound down the four-day Shoptalk conference in Las Vegas.
In particular, retailers, heavily dependent on clothing, electronics and other imports, are concerned that the border adjustment tax will crimp profits and force them to raise prices. The tax is part of the House-proposed tax reform plan.
“I’ve been very active in D.C. this year,” said Target CEO Brian Cornell in a keynote session. “What people don’t understand is if this goes forward, it’s the consumers in the US who are going to pay for it because there’ll be higher prices in apparel, home goods and school supplies. It puts us in a difficult position.”
Cornell in February was one of eight retail leaders who met with President Donald Trump at the White House to discuss the implications of the tax and other things.“We’ve seen the impact of higher prices in categories. It reduces demand.”
“To tell American consumers they ought to pay 20% more for things like apparel, shoes and home goods intuitively doesn’t make sense to me,” said Kohl’s Corp. CEO Kevin Mansell at a separate presentation. “We’ve seen the impact of higher prices in categories. It reduces demand.”
The proposal has divided corporate America, with major US exporters from Boeing to General Electric forming a coalition to support the plan.
The National Retail Federation, the industry’s largest trade group, has estimated that the tax would cost the average US family $1,700 in the first year alone if enacted. Citing US Department of Commerce Bureau of Economic Analysis (BEA) data, the NRF estimated consumers could expect to see an increase of over $350 per year for clothing if there were a 20% destination-based tax on imports.