There is a lot of uncertainty surrounding the proposed “border adjustment tax.” Retail businesses are organizing to fight a tax that could make every imported good Americans buy 20% more expensive. CNBC’s Krystina Gustafson writes:
The NRF’s forecast comes as retailers are eyeing the potential impacts of a border adjustment tax, a GOP proposal that threatens to slap a 20 percent tax on goods they import and sell in the U.S. The industry has banded together to fight the tax, which they argue could wipe out their earnings and raise prices for consumers.
A recent analysis by Ernst and Young, commissioned by the NRF, found that the proposal could cost the average American family $1,700 in the first year alone, as prices go up on everything from apparel to gasoline.
Proponents of the tax counter that it would cause the value of the dollar to increase, and consumers therefore would not be left footing the bill.
“Our forecast represents a baseline for the year, but potential fiscal policy changes could impact consumers and the economy,” NRF Chief Economist Jack Kleinhenz said. “It seems unlikely that businesses will notably increase investment until tax reform and trade policies are well-defined.”
The NRF’s forecast follows a tumultuous holiday season for many retailers. Though the trade organization said that sales increased 4 percent in November and December — topping its prediction of 3.6 percent growth — major retailers from Macy’s to Under Armour reported disappointing results.
Last February, the NRF predicted retail sales would increase 3.1 percent during the year. The trade group then raised its growth forecast to 3.4 percent in July, citing a better housing market, job growth, higher wages and a greater-than-expected lift in online sales.
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