WASHINGTON – President Donald Trump on Wednesday met with a group of executives from big-name retailers such as Target and Best Buy, a conversation in which the industry planned to make the case that they believe a Republican plan for tax reform would be detrimental to their businesses – and to the wider economy.
Major retailers have come out swinging against a provision of the tax proposal known as border adjustment, which effectively creates a new tax on imports. Given that goods such as apparel and electronics are largely made overseas, the stores fear their tax bills will soar so high that they will be forced to hike the prices that shoppers see on store shelves.
In a statement released before the meeting, David French, senior vice president of government relations at the National Retail Federation, said, “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 threatens tens of millions of jobs supported by the retail industry.”
In opening remarks at the meeting, Trump told the executives “my administration remains very focused on the issues that will encourage economic growth,” and he went on to talk about his plans to slash regulations and overhaul the tax code. And he praised the retail business as “one of the great job producers” in the U.S. economy.
It is not clear whether Trump supports the border adjustment idea that congressional Republicans have put forward. In an earlier interview with the Wall Street Journal, he said it was “too complicated.”
Congressional Republicans have included border adjustment in their tax plan as a way to generate more than $1 trillion in revenue for the federal government. It could prove difficult to get them to abandon the provision because it is a linchpin of the entire plan: It raises the dollars needed to offset some of the other tax cuts being proposed.
The border adjustment tax has created fault lines in corporate America: Oil refiners, for example have joined retailers in opposing the plan. But a coalition of exporters has thrown their support behind the plan. The American Made Coalition, which includes the likes of GE and Boeing, says the tax plan would level the playing field for them and other American exports.
The executives who attended the Wednesday meeting at the White House include Brian Cornell of Target; Marvin Ellison of J.C. Penney; Art Peck of Gap; Hubert Joly of Best Buy; Bill Rhodes of AutoZone; Gregory Sandfort of Tractor Supply Co.; Jill Soltau of Jo-Ann Stores; and Stefano Pissina of Walgreens Boots Alliance, the parent company of drugstore chain Walgreens.
Upon leaving the White House, Rhodes said the group had a “positive and productive” conversation with the president, but he did not say what was discussed.
In a statement, released shortly thereafter, Rhodes said, “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.”