Market Overview

Trump's Border Tax Represents An 'Existential Threat To Retailers,' Former Retail CEO Says

Share:
Trump's Border Tax Represents An 'Existential Threat To Retailers,' Former Retail CEO Says

President Donald Trump hosted retail CEOs at the White House Wednesday. While details of the talks remain scarce, it is reasonable to assume the discussions focused on Trump's proposed border tax, which will levy an import duty on items manufacturing outside of the United States.

Steve Sadove, former CEO of Saks Incorporated (since acquired by Canada's Hudson Bay Company), was a guest on CNBC's "Squawk Box" segment Thursday to share his expertise.

Sadove, a member of the executive committee and board of the National Retail Federation, had nothing positive to say as he argued the border tax is not only "war" against retailers but an "existential threat."

Related Link: Trump's 20% Border Tax Could Be A Tactic Referenced In 'The Art Of The Deal'

'This Is A Major, Major Threat'

"It could have a major impact on the consumer," he argued. "I think the consumer will have to pay as much as $1,700 more per year for their products. I don't believe that the retailers are going to be able to pass that kind of increase on to all of the consumers."

Sadove added that retailers will see their profitability "killed." Moreover, even if the border tax is accompanied by a reduction in corporate tax rates, retailers won't have much profit to be taxed on.

"This is a major, major threat," he emphasized.

Poor Earnings Cast Shadow On Sector

Finally, Sadove noted many retailers reported poor earnings results in the fourth quarter, and the addition of a border tax will merely "accelerate the rate of closures" of brick-and-mortar stores.

Since Election Day, SPDR S&P Retail (ETF) (NYSE: XRT) is up 4.16 percent. The ETF is also enjoying a 10.56 percent bump since Inauguration. However, year-to-date, the ETF is down 1.13 percent.

Image Credit: By Gerald L. Nino, CBP, U.S. Dept. of Homeland Security - http://www.cbp.gov/xp/cgov/newsroom/photo_gallery/afc/bp/29.xml, Public Domain, via Wikimedia Commons

 

Related Articles (XRT)

View Comments and Join the Discussion!

Posted-In: News Politics Events Global Economics Movers Media General Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com