The retail industry is wielding a new weapon in its long-running battle against a border adjustment tax: the U.S. dollar.
The Retail Industry Leaders Association, one of the trade groups leading the fight, commissioned a study slated to be released Monday arguing that the border tax proposal — which would effectively impose a 20 percent tax on imports — could disrupt foreign exchange markets and result in higher prices for consumers. The analysis by Capital Economics, an independent consulting firm, estimated the U.S. dollar would need to appreciate by 25 percent in order to offset the new tax. But it predicted the greenback would likely rise by only single digits instead.
For consumers, that could translate into a price hike of 2.1 percent, the report warns, with even bigger jumps for certain types of goods, such as apparel.
"Like all things that seem too good to be true, it is," the report states. "There are many reasons to believe that this adjustment is unlikely to occur, especially in the short run, but even over the medium to long run."