WASHINGTON — The Border Adjustment Tax (BAT), a Trump administration proposal to tax imported goods as a budget-balancing measure, is dead.
In a joint statement on tax reform released July 27, House Speaker Paul Ryan, R-Wis., said he would not pursue the BAT, which faced strong opposition from the retail sector.
Joining Speaker Ryan in the statement were Treasury Secretary Steven Mnuchin; Senate Majority Leader Mitch McConnell, R-Ky.; Senate Finance Committee Chairman Orrin Hatch, R-Utah; House Ways and Means Committee Chairman Kevin Brady, R-Texas; and National Economic Council Director Gary Cohn.
"We are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base," the joint statement said.
"While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform," it said.
The BAT would have offered tax breaks to U.S. companies that export goods, while adding a tax as high as 20 percent on imported goods.
Virtually all U.S. retailers opposed the BAT, including tire and auto parts retailers, which said they could not survive paying increased taxes on revenue.
In February a coalition of 600-plus trade associations and businesses joined together under the Americans for Affordable Products (AAP) umbrella to lobby against the BAT, arguing that imposing such a tax will result in higher costs for U.S. consumers on everyday items including food, gas and clothing.
U.S. companies heavily dependent on exports supported the tax, while U.S. retreaders saw in the BAT as a possible respite from the competition from low-priced Chinese tires.