Trump echoes campaign rhetoric promising ‘major’ border tax for overseas manufacturers
President Donald Trump called a meeting on Monday with business executives from various industries to warm them about a potential tax implemented when producing outside of the United States. “if you go to another country … we are going to be imposing a very major border tax,”. This is particularly troubling for the retail fashion industry, as we reported in December, “about 95 percent of clothing and shoes sold in the U.S. are manufactured overseas, which means imports make up a vast majority of many U.S. retailers”
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 meet with executives again next month and quarterly thereafter. While it is unclear as to how the President will implement the boarder tax, or if it is anyway linked to the separate GOP-proposed adjustment or VAT tax, remains to be seen.
President Trump shifted some of the focus towards other issues he felt as important, stressing red-tape and stigmatizing regulations as a major constraint to doing business in the US: “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.” Border taxes in general have been met with apprehension from retailers, as many expect the costs to be passed on to consumers via price increases. With many fashion industry retail stores struggling even in an positive economic environment, any tax or uncontrollable increase in prices will make it even more difficult for fashion retailers facing bankruptcies: American Apparel, the limited, SoCal, and store closings: Fashion house BCBG, Macys, JC Penny.
The main concern right now, is the vagueness and lack of clear implementation that make projections and planning difficult. More than just a threat, the newly elected head of state reportedly is asking industry leaders to come up with a strategy to bring manufacturing jobs back to the United States, a key component of his campaign. Representatives included those from: Under Armour, Ford Motor Co., Whirlpool Corp, Johnson & Johnson, Dell, Tesla Motor and initial statements called the meeting “productive”.