Retailers Form Coalition to Fight Import Taxes

Americans for Affordable Products, that’s the name of a new organization formed to fight taxes on imports to the United States.

Eric Johnson reported in American Shipper:

A group of more than 100 U.S. retailers and retail trade associations on Wednesday created a new organization dedicated to highlighting the increase in prices consumers would face if Congress and the Trump administration follow through on policies to add taxes or tariffs to U.S. imports.

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Members of the coalition include some of the country’s biggest importers, like Walmart, Target, DICK’s Sporting Goods and Macy’s. It also includes manufacturers that operate retail outlets in the United States, like Abercrombie & Fitch, or both operate independent outlets and depend on retailers to sell their products manufactured abroad, like Nike and Levi Strauss & Co.

Major trade associations, like the National Retail Federation, the Retail Industry Leaders Association, the American Apparel & Footwear Association, as well as a number of state retail associations are also involved.

Retailers who sell imported goods have been worried about protectionist policies from President Trump increasing the costs of the products they sell.

Increased tariffs and taxes on imported goods from around the world will hurt the average American, according to the Americans for Affordable Products coalition, by increasing the cost on an assortment of goods Americans buy every day. The coalition says on its website:

The Americans for Affordable Products is a coalition of job creators, entrepreneurs, and business leaders united against higher prices on everyday necessities. We oppose any Border Adjustment Tax (BAT) because it will increase the cost of clothing, food, medicine, gas, and other essential items that Americans rely on. Consumers shouldn’t bear the burden of this new tax while some corporations get a tax break. We fight for consumers by protecting their pocketbooks and ensuring access to affordable everyday products. We support comprehensive tax reform and encourage Congress to implement policies that helps businesses of all sizes, ensures the protection and creation of jobs, and promotes prosperity for all Americans.

Right now, Congress is moving a BAT forward that is exactly the kind of thing that importers are worried about, creating the urgency for the Americans for Affordable Products coalition. Surprisingly, the coalition just may have an ally in the White House when it comes to this BAT.

Richard Rubin and Peter Nicholas reported in the Wall Street Journal that President Trump called the plan “too complicated” and went on to say, “Anytime I hear border adjustment, I don’t love it. Because usually it means we’re going to get adjusted into a bad deal.  That’s what happens.”

It’s not likely the coalition is feeling all buddy-buddy with President Trump. After all, the new commander in chief has talked much about imposing tariffs, and the BAT, as part of a larger corporate tax plan, could be seen as an alternative to a Trump tariff plan.

It should be noted there are some businesses in favor of the BAT, seeing it as something that will help smaller businesses with American-made products compete when retail is dominated by big importers like Wal-Mart.

Proponents of the BAT say it will not hit consumers with higher priced goods as Americans for Affordable Products claims because it will strengthen the U.S. dollar, decreasing the cost of buying goods and therefore neutralizing the tax increase.

James Pethokoukis, in an article on Ricochet.com, sums up how proponents see this tax not hurting American consumers like this:

What happens to the dollar is key here. Economists typically predict the dollar would rise in value by as much as 25% in response to the border adjustment. That would make imports cheaper and offset the tax change.

Of course, Americans for Affordable Products would disagree with that assessment.

While taxes would increase on imports under this proposed BAT, U.S. exporters would get a big tax break. Therefore, we’re not likely to see a coalition of exporters against the BAT. Then again, other countries may retaliate with taxes on U.S. exports and the increased value of the dollar may decrease the buying of U.S. products, so you never know.

What is your opinion on a BAT? Share in the comments section below.