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Target CEO, Best Buy argue against import tax that could devastate business

Brian Cornell will appear before representatives on Tuesday.
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Target's CEO Brian Cornell will appear before Congress on Tuesday to argue against the Republicans "border adjustment tax" that could take a huge toll on the Minneapolis retailer.

The Wall Street Journal reports Cornell is on the witness list to appear before the House Ways and Means Committee along with the Juan Luciano, the head of grain company Archer Daniels Midland, who is expected to argue in favor of the tax.

The border adjustment tax being considered by the Republican-led Congress would implement a tax of up to 20 percent on goods imported into the U.S., while giving a tax break to U.S. companies exporting their own goods overseas.

This tax could have massive implications for Target, which imports a lot of its clothing, electronics and other products from Asia.

It could put Target, and other retailers including Best Buy, on the hook for billions of dollars in additional taxes.

Cornell has previously said the policy would increase Target's tax obligations from around the 35 percent it is today to around 75 percent, a move he told CNBC's Power Lunch would be "detrimental to U.S. families."

It was one of the things Cornell discussed when he joined other retail leaders at the White House to meet with President Donald Trump back in February.

On Monday, former Best Buy CEO Brad Anderson backtracked on remarks he made earlier this year to say he is now firmly against the border adjustment tax.

In March, the now-retired Anderson said there was enough potential and economic growth from other tax reforms being planned by the government to mitigate the worst impacts of the import tax.

But in a statement, he said he had been given inaccurate information about the border adjustment tax, and said the implications for consumers and his former company could be stark.

"The BAT is a new tax on everyday items purchased by hardworking consumers which would lead to significant price increases on essential products and job losses for the retail industry, an industry that is responsible for 42 million jobs in the U.S.," he said.

"It moves the country in the wrong direction by abandoning real tax reform aimed at lowering rates and eliminating loopholes, and instead introduces new loopholes for foreign sellers and picks winners and losers among various industries. The BAT is an untested policy proposal with risks that far outweigh any theoretical benefits."

More on the border tax

Supporters of the border adjustment tax say the taxes on imports would be offset by an increase in the value of the dollar, thus reducing the cost of imported goods.

But The Economist reports the dollar would need to rise 25 percent to cancel out the impact of a 20 percent import tax.

The Republican party is gathering feedback and evidence as it discusses the border tax, which would have to be approved by Congress before it's implemented.

The Wall Street Journal says the tax would generate $1 trillion of revenue, which the government would use to reduce corporate taxes. The proposal is proving unpopular particularly among retail companies, though it has support among U.S. manufacturers.

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