Retailers' heated price wars may get doused with a bucket of cold water.
While the specifics around potential legislation remain fuzzy — as well as its odds of passing — the current version being pushed by the GOP calls for a 20 percent tax on products coming into the U.S.
Given that the majority of apparel, footwear and consumer electronics sold in the U.S. are manufactured abroad, retailers have frequently, and vociferously, asserted that such a tax would wipe out their profits and force them to charge more.
That rhetoric stands directly at odds with their promise to offer low prices every day, underscoring just how tightly they're being squeezed as they compete for penny-pinching shoppers' dollars.
"In the long-run, it's not sustainable to absorb these costs," Johan Gott, a principal at strategy and management consultant A.T. Kearney, told CNBC. "Retailers don't have very large margins to play with."
Yet the very real possibility of being forced into price increases hasn't stopped retailers from promising more consistent deals. At its recent investor day in New York City, Target said it would dial back its use of one-off coupons in favor ofeverydaylow prices — a phrase that's become synonymous with Wal-Mart's strategy.
Like Target, the world's largest retailer over the past year has been looking at its cost structure to systematically lower prices. And on a call with investors earlier this month, a Costco executive said the club retailer, too, is moving toward an everyday low pricing model on more of its items.