Japanese fast fashion retailer, Uniqlo, has said that it would shutter its US stores if faced with the Border Adjustment Tax (BAT) proposed by US President Donald Trump. The proposal includes a reduced 20 per cent corporate tax rate, a switch to a territorial system and ‘border adjustments’ – taxes on imports but not exports. For most large retailers like Uniqlo, the lower tax rate won’t sufficiently make up for lost sales due to the higher prices wrought by import taxes.
“If I was directly told to do so, I will withdraw from the United States,” commented, Tadashi Yanai, Chairman and President, Fast Retailing Co. owner of Uniqlo, adding, “(If BAT implemented) then there’d be no incentive for us to be in the US.”
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Furthermore, Tadashi believes making quality goods in the US that are affordable for consumers would be impossible, hence Trump’s approach wouldn’t benefit US consumers either. “Anyone will think that it is an open-and-shut and impossible situation. If manufacturing products in the US is not a good decision for consumers, it is meaningless to do business in the United States,” concluded Tadashi.
It’s pertinent to mention here that the fashion brand owns 50 stores in the US and repeated efforts at expansion floundered, leading the company to scale back ambitious expansion efforts that would have seen 200 Uniqlo stores in the country. Tadashi said he still hopes to open 20 to 30 stores per year. However, it will shut existing stores in large shopping malls on city outskirts.
