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As US President Donald Trump reportedly voiced some of his strongest support yet for a border-adjustment tax — which is designed to boost exports — companies that rely heavily on imports have seen their shares take a hit.
Several major retailers saw their shares sink on Thursday afternoon after Reuters published an interview with Mr Trump discussing the proposal.
Best Buy each fell 3 per cent, Wal-Mart was off 0.5 per cent, Target declined 1.4 per cent, Kohl’s was down 2 per cent and Nike dropped 1.46 per cent. The S&P retail ETF, which tracks the performance of the S&P 500′s retail sector, finished the day down 2.3 per cent.
All of those companies are part of a trade group, Americans for Affordable Products, which was created recently to oppose a border-adjustment tax said to be under consideration by Mr Trump and Republican lawmakers, who have pledged to push a tax reform plan this year as part of Mr Trump’s pro-growth agenda.
While the details of such a proposal are not yet available, a border-adjustment tax – a form of which have been adopted by numerous countries – would tax imports while offering a rebate for exports, proving a net boost for domestic manufacturers while weighing on those that rely on goods made cheaply overseas. Among the industries most likely to be impacted are apparel and consumer-goods companies, according to UBS analysts.
In the Reuters interview, Mr Trump offered some of his strongest support to date for such a measure, saying that he “certainly” supports “a form of tax on the border,” and that “it could lead to a lot more jobs in the United States.”