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With the news that President Donald Trump might impose a border tax that would affect goods imported from Mexico and sold in the US, retailers are taking to Washington, DC to lobby.
According to the National Retail Federation (via CNBC), a “large number” of retail CEOs have been making trips in the past few months to protest Trump’s border tax, as well as a proposal from Republicans in Congress for a border adjustment tax. While the exact details of both are still in question, Trump’s “big border tax” — theoretically around 20 percent — was floated as a way to pay for the wall between the US and Mexico.
Target CEO Brian Cornell was in DC last week lobbying against such taxes, according to Politico. CNBC was also told yesterday that members of the Retail Industry Leaders Association, which includes Walmart, Nike, Target, and JCPenney, contacted the group regarding the issue, even though some of these retailers “typically do not engage in public policy issues.”
When CBNC reached out for comment, Target shared that it was "closely monitoring the ongoing discussions on tax reform and the impact of the House's proposed border adjustability tax on our guests.”
A tax affecting Mexican imports would affect US apparel companies, from those who fully manufacture across the border to those who import textiles that are then assembled here, potentially impacting about 64,000 American textile employees. In the men’s jeans category alone, a whopping 40 percent of what’s sold in the US comes from Mexico.
A tax increase on imports, particularly in the form of a “border adjustment” that hits companies that manufacture abroad but sell more domestically, could force brands to raise prices. As Coach CEO Victor Luis put it yesterday, “any border tax will of course lead to higher prices for the consumer.” And while this might work for affordable luxury brands like Kate Spade or Coach, the companies that won’t be able to convince shoppers to pay more — think Gap, Urban Outfitters, and American Eagle — could have a hard time.
Of course, apparel CEOs’ outrage over tax increases may read as a little tone-deaf, considering the current turmoil over Trump’s other controversial border ruling on immigration. Sure, a border tax could affect retailers and shoppers. But the people hit most by Trump’s new policies may be the thousands of Syrian refugees fleeing violence and mass murder that have officially been banned from the US, not to mention the immigrants from seven very specific countries.
So far, the fashion and beauty industries have been particularly mum about the immigration ban, sans a few companies like Nike and REI. While tech industry CEOs are speaking out loudly since it directly affects many of their employees, retail CEOs seem less concerned, especially considering that those making our clothing are often thousands of miles away, out of sight and out of mind.
When it comes to standing up for profits, though, they seem to be all in. Which is disconcerting, but unfortunately not all that surprising. America is a hotbed for capitalism, so if a violation of human rights can’t get retailers to speak up, maybe dollar signs will. If the immigration ban and refugee crisis could rebrand itself as an enterprise opportunity, perhaps business leaders in retail would care about the business, and also about the leading.