In an interview with The Wall Street Journal, Trump said the border-adjustment tax was "too complicated." The tax would help pay for Republicans' corporate tax cut by placing a levy on imports. It also would exclude U.S. exports from being taxed, and proponents of border adjustment say it would therefore help U.S. companies compete on a level playing field with foreign companies.
The proposal could sting the energy industry in at least two ways.
First, refiners and large integrated oil companies with refining business — including Chevron — may see the cost of imported oil go up, which would make it more expensive for them to acquire the raw crude they're in the business of refining.
A border-adjusted tax also could drive up the value of the dollar. A stronger greenback would make crude oil more expensive to holders of other currencies because it is priced in U.S. dollars. So emerging nations, which are currently responsible for driving most of the demand for oil globally, may cut back on purchases as oil gets more expensive in their currency.
Watson said during Chevron's quarterly earnings conference call that the corporate tax system does not allow U.S. companies to compete on a level playing field, but he added that lawmakers need to "take a close look" at the potential unintended consequences of the border adjustment tax.
"I have no doubt the administration will do that and settle on the right tax reform at the end of the day," Watson said.