Uniqlo chief stated: We'll close stores if US imposes border adjustment tax.The dawning of a new presidential administration means changes are up ahead, and that’s been readily apparent ever since the inauguration of President Donald Trump. The 45th President of the United States has enacted some policies that will have far reaching consequences - and he’s not done yet. A number of proposals are still on the table or in the talking stages, and at least one of them could have a significant impact on the retail sector.
As NBC News shares, Uniqlo has taken umbrage with one proposed policy. In fact, they have outright threatened to shutter its US locations if the system goes through. The policy in question is known as the border adjustment tax, which would substantially increase taxes on imports but leave exports unaffected.
It’s aimed at encouraging companies to keep their manufacturing operations within US borders, but it will substantially impact those with established operations overseas. One of these enterprises is Uniqlo, and they could resort to drastic measures in response.
"If I was directly told to do so, I would withdraw from the United States," said Tadashi Yanai, chairman, and president of Uniqlo’s parent company Fast Retailing Co.
Uniqlo currently has about 50 stores in the US, but the company has plans in the works to expand at a rate of 20 to 30 stores per year. The border adjustment tax would grind those plans to a halt.
"Anyone will think that it is an open-and-shut and impossible situation. If [manufacturing products in the United States] is not a right decision for consumers, it is meaningless to do business in the United States," Yanai continued.
We’ll have to wait and see how the policy plays out, but we can be sure that Uniqlo is not the only retailer drawing up contingency plans in case it goes through. While the tax may save jobs on one end by retaining manufacturing jobs, it could result in the loss of some employment in the retail sector. That’s an apparent balancing act that the Trump administration will need to keep in mind before putting pen to paper on this one.
"The U.S. represents one of our top priority markets as a global company. Uniqlo will stay true to our core business values of offering the highest quality apparel at accessible prices, and these values are central to our customer-centric philosophy," a spokesperson for Uniqlo said.