By Khadeeja Safdar and Louise Radnofsky
Chief executives from several major U.S. retailers, including Target Corp., Best Buy Co. and Gap Inc., met with President Donald Trump on Wednesday to lobby against a proposed tax plan that would hurt their profits.
The executives left the White House meeting, which lasted less than an hour, saying it was productive but they gave few details about what was discussed. Mr. Trump, meanwhile, tweeted a photo with the group, calling it a "great listening session."
Mr. Trump has been meeting nearly every week with groups of CEOs and used the occasions, and ensuing media coverage, to tout his efforts to create U.S. jobs and cut taxes and regulation. He has met with pharmaceutical executives and manufacturing CEOs.
But the retailers at the meeting, which also included J.C. Penney Co. and Walgreens Boots Alliance Inc., stand to lose more than do other industries if Mr. Trump imposes new tariffs on trade or taxes on imports. Most rely heavily on overseas factories for the goods they sell.
Flanked by his son-in-law, Jared Kushner, and adviser Gary Cohn, Mr. Trump praised the executives, calling them "some of the great CEOs of our country, and the biggest in the retail industry."
Mr. Trump spoke about his administration's hope for regulatory changes and overhauling the tax code. "We're cutting regulations big league," he said. He called the tax code "too complicated" and promised to simplify it.
"We're going to lower the rates very, very substantially for virtually everybody in every category, including personal and business," he said.
The border-adjusted tax proposal, which would tax imports and exempt exports, is part of a House Republican plan aimed at encouraging companies to locate jobs and production in the U.S. The plan would also cut the corporate tax rate, permit multinational firms to repatriate foreign profits and allow companies to write off capital expenses immediately.
The proposal has divided business leaders, with retailers among the industries that have opposed it and big exporters supporting it. Mr. Trump has been ambivalent about the border-adjustment plan, and the White House now says it is one option.
Several retail CEOs have raised concerns about the measure, warning it would force them to raise prices because they rely so heavily on imported goods. They visited with congressional leaders later Wednesday.
After that meeting, Rep. Kevin Brady, a Republican who also heads the House Ways and Means Committee, said the border-adjustment proposal is a "critical component" of the broader tax plan. "There is no real tax reform that keeps in place tax breaks for foreign products over American products," he said in a CNBC interview. "No one has yet convinced anyone that we should defend the current code that forces jobs overseas."
Bill Rhodes, CEO of AutoZone Inc., spoke briefly after the meeting with Mr. Trump but didn't take questions. The Retail Industry Leaders Association, a trade group that organized the meeting, issued a statement from Mr. Rhodes saying that the companies "stressed the importance of taking a thoughtful approach to tax reform for both individuals and corporations."
According to Target, the border-adjustment proposal came up during the meeting, and the retailer said the proposal would raise prices for U.S. consumers. "If enacted, the House proposal would have profound implications for our guests and business, and at Target, we believe that anything that raises prices for families is not a good idea for America, " it said.
The retail industry is already struggling with dwindling foot traffic and shrinking profit margins as more U.S. consumers do their shopping online. Earlier this year, several retailers, including Sears Holdings Corp. and Limited Stores LLC, announced drastic store closures because of weak sales.
A plan that increases taxes on imports would hurt retailers that produce many of their goods overseas but sell them largely in the U.S., while those with stronger international sales and pricing power, such as Nike Inc., wouldn't be as adversely affected, according to Randal Konik, an analyst at Jefferies.
Write to Khadeeja Safdar at firstname.lastname@example.org and Louise Radnofsky at email@example.com