- During a Monday meeting at the White House, President Donald Trump warned business executives “if you go to another country … we are going to be imposing a very major border tax,” multiple news outlets reported.
- Trump called on the executives in attendance (including representatives from Under Armour, Ford Motor Co., Whirlpool Corp, Johnson & Johnson, Dell, Tesla Motors and others) to devise a strategy to increase U.S. manufacturing.
- Trump also said he would cut taxes for the middle class and reduce government regulations by 75%. "The problem with the regulation that we have right now is that you can't do anything," he said. "I have people that tell me that they have more people working on regulations than they have doing product."
From day one, Trump seems to be on the march to make good on one of his biggest campaign promises — to bring manufacturing jobs back to the United States. Press Secretary Sean Spicer told media outlets on Monday that Trump's plan will also be about creating higher-paying jobs, and added that the president will to meet with executives again next month and quarterly thereafter.
While initial statements from CEOs characterized Monday's meeting as “productive,” many retailers have expressed concern over the impact of border taxes. Just last week, Federal Reserve Bank of New York President and CEO William Dudley warned retailers that a separate GOP-proposed border adjustment tax could have “unintended consequences” for consumers. Such a proposal would create a border tax on imported goods by ending retailers’ ability to deduct the cost of imported merchandise, and could effectively spur price increases of up to 15% for retailers to retain profitability, the National Retail Federation estimates.
“That type of adjustment proposal in the House, it’s a pretty dramatic change,” Dudley said. “I think that it will probably lead to a lot of changes in the value of the dollar, the prices of imported goods in the U.S. I’m not sure that that would all happen very smoothly and I also think there could be lots of unintended consequences.”
In a separate panel discussion at last week's NRF Big Show 2017, economists and advisory groups further addressed the state of retail and the implications of the GOP border tax, which Joel Feldman, senior managing director and the assistant director of research at Tesley Advisory Group, said seems similar to Trump's initial tax plans.
“[S]ome of it is semantics, and it’s going to take time to see how this is flowing in," Feldman said. "But clearly, when we talk to the retailers, they don’t know. They don’t even want to model it out. We ask, ‘What’s the impact of border taxes on your business?’ and they won’t say. They all generally say it’s bad.”