The Border Adjustment Tax: What You Need to Know

A fight is brewing in Washington against those who want to tax imports and those who don’t. How it ends may affect what you pay for many consumer goods, including apparel. Here’s what you need to know:

It’s no secret that one of the main reasons behind the election of Donald Trump was his pledge to bring jobs back to the United States. The Border Adjustment Tax, a proposal favored by many House and Senate Republicans is seen as key to fulfilling that promise.

To summarize the policy idea, border adjusted corporate taxation would allow companies to deduct all export sales from taxation and no longer deduct import costs. Those who support it argue that the tax will help the economy grow; by taxing imports but not exports, it would move the U.S. closer to taxing consumption rather than savings and investment, which in turn would encourage economic growth. It is further argued that such a tax would create better-paying jobs and entice companies to produce their goods here.

Conveniently left out of the discussion is the very real threat that such action could provoke a trade war and result in additional tariffs on American-made goods. And some industries would feel the effects of a border tax more than others. Leading the way? The apparel industry, which imports over 90 percent of its inventory each year.

It may be vogue to wax nostalgic about the garment factories of yesteryear, but apparel manufacturing left the shores of the U.S long before anyone ever heard of NAFTA. Cheap labor was its death-knell then; today jobs are disappearing because of technology.

No tax will reverse this trend. If enacted the border tax will result in higher prices for goods like apparel. And those costs will be passed on to the consumer. Moreover, a University of Maryland study completed in January showed that a border adjustment tax could lead to a “dramatic spike in unemployment levels” not seen since 2010, with jobs losses in some sectors estimated at 20 percent.

Whether the policy will be enacted is less than certain. Retailers have pushed back, and that has caught the attention of some Republicans. Many in the uniform industry have expressed their concern to those in Washington. If you’d like to add your voice, contact the House and Senate members who represent you. All you need to do is follow this link, type in your address and zip code and hit send. A letter will automatically be sent to Congress, and you will be given an opportunity to invite others to take similar action.

You could also call your representatives. To find your elected officials’ contact information, follow this link

Learn more about the border tax by visiting: