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|Subject: A border tax would throw a wrench into retail's price wars Mon Mar 13, 2017 11:52 pm|| |
|Retailers' heated price wars may get doused with a bucket of cold water.|
As companies like Target (TGT) and Wal-Mart (WMT) go head-to-head on value, a House bill proposing a tax on imported goods threatens to undermine any progress they make.
While the specifics around potential legislation remain fuzzy — as well as its odds of passing — the current version being pushed by the GOP calls for a 20 percent tax on products coming into the U.S.
Given that the majority of apparel, footwear and consumer electronics sold in the U.S. are manufactured abroad, retailers have frequently, and vociferously, asserted that such a tax would wipe out their profits and force them to charge more.
That rhetoric stands directly at odds with their promise to offer low prices every day, underscoring just how tightly they're being squeezed as they compete for penny-pinching shoppers' dollars.
"In the long-run, it's not sustainable to absorb these costs," Johan Gott, a principal at strategy and management consultant A.T. Kearney, told CNBC. "Retailers don't have very large margins to play with."
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