Target CEO says border adjustment tax would be detrimental to American families

Target CEO: We're confident in our new direction
Target CEO: We're confident in our new direction

A Republican proposal for a border adjustment tax would have a detrimental impact on American families, Target CEO Brian Cornell told CNBC on Tuesday.

Cornell, who was among retailers who have met with President Donald Trump, said he believes the White House understands the concerns and doesn't want to see prices "go up 15, 20, 25 percent for families buying clothes for their kids, school supplies, basic staples."

"They understand the impact of retail," Cornell said on CNBC's "Power Lunch." "Target pays 35 percent effective taxes today. If this were to go forward, our tax rate would go over 75 percent."

A border adjustment tax, which would levy fees on imports, is a core part of a broad tax reform "blueprint" being pushed by House Republicans, including House Speaker Paul Ryan and Ways and Means Committee Chairman Kevin Brady.

Last week, Treasury Secretary Steven Mnuchin told CNBC the Trump administration is listening to an array of businesses that are concerned about the impact of a border-adjusted tax on their profits.

"We're reaching out to business, not just big business but small- and medium-sized businesses also, and we're listening to what people have to say," Mnuchin said on "Squawk Box."

Cornell made his comments after the retailer posted fourth-quarter sales and earnings that missed Wall Street's expectations. Its outlook for fiscal 2017 also fell short of expectations. The earnings report sent Target share prices sharply lower.

Target has struggled to keep up with rival Wal-Mart, which has been pouring money into its stores, employees and digital operations.

Target said Tuesday it will cut prices over the next three years in a $7 billion program that it hopes will lure back customers and boost its digital properties.

—CNBC's Krystina Gustafson and Reuters contributed to this report.