Ryan and Rep. Kevin Brady, the Texas Republican who chairs the House Ways and Means Committee, have championed the border-adjustment plan as a way to raise revenue that would help finance tax-rate cuts. Independent estimates have said it would raise more than $1 trillion in tax revenue over 10 years. They also say it would help American-made products compete more effectively in overseas markets, while stimulating more domestic manufacturing.
Those who oppose the border-adjusted tax say it would lead to higher prices on a range of consumer goods — though supporters say a strengthening dollar would ultimately even such effects out. Opponents have gained valuable allies in Trump's administration. Treasury Secretary Steven Mnuchin is said to oppose the border-adjustment concept, as is Gary Cohn, Trump's top economic adviser.
Meanwhile, Stephen Bannon, the president's chief strategist who favors an "economic nationalist" approach, is said to favor the proposal.
The retailers were aided early when, less than a month into Trump's presidency, they scheduled the chief executive officers of several retail companies to meet with Cohn, the head of the National Economic Council. Cohn elevated the event to a meeting with the president on Feb. 15, at which the border-adjustment plan was discussed, according to people familiar with the meeting.
Trump himself hasn't weighed in yet — and that lack of clarity has left Ryan's plan without much political cover, leaving it open to attack, said Gray of the AAF.
The main opposition group, Americans for Affordable Products, debuted on Feb. 1, and now has more than 400 member companies. A flood of CEOs including J.C. Penney haven't been shy about lambasting the border-adjustment proposal. Wall Street analysts have chimed in; the concept "would be a really big hit to some companies," said Scot Ciccarelli of RBC Capital Markets. Retail stocks have declined this year while the overall market hit new heights.
"No other issue galvanized the industry like this one," said Brian Dodge, senior executive vice president of public affairs for the Retail Industry Leaders Association, one of the groups leading the opposition. "Until the sponsors declare it dead, we will continue to fight against it."