Retail stocks move higher after Mnuchin shoots down controversial tax proposal

The White House just outlined its tax plan. Here's what's in it

Retailers can breathe a collective sigh of relief.

The S&P Retail ETF rose 1.5 percent on Wednesday after Treasury Secretary Steven Mnuchin shot down the current version of a House proposal that threatened to impose a 20 percent levy on imported goods.

Retailers from J.C. Penney to Target had been extremely vocal about the impact the tax would have on their business, with Penney's CEO Marvin Ellison telling CNBC last month that it would send his chain's tax rate from 34 percent to 170 percent. That, Ellison said, would make it "virtually impossible" to turn a short-term profit.

Others, like PVH CEO Manny Chirico, argued the so-called border adjustment tax would force retailers to eliminate jobs as they looked for ways to cut costs. Meanwhile, industry lobbying groups like the National Retail Federation and the Retail Industry Leaders Association said the BAT would universally raise prices for consumers. That's because the vast majority of goods sold in the U.S. are manufactured overseas.

It appears that the White House heard the industry's complaints.

"We don't think it works in its current form, and we're going to continue to have discussions with them about revisions," Mnuchin said Wednesday.

Mnuchin's comments came as White House officials lifted the lid on President Donald Trump's tax plan. The proposal includes trimming the number of income tax brackets from seven to three, and cutting the corporate tax rate to 15 percent from 35 percent. It does not mention a border adjustment tax as outlined by the House.

CNBC's Jacob Pramuk contributed to this report

Watch: BAT tax would be a disaster

BAT tax will be a disaster: AAFA CEO