Meg Whitman, CEO of Hewlett Packard Enterprise, said she is concerned about the proposed
border adjustment tax being pushed by Republicans in Congress, one day after US President Donald Trump spoke favourably about it.
“[M]y view is that this actually does not create jobs,” she said when asked about the proposal during an interview with CNBC’s David Faber. “It actually lowers the number of jobs for many, many companies.”
She explained in more detail:
“The border adjustment tax is not good for companies that have a relatively low margin with a supply chain that is outside the United States. And so, we could certainly assemble in the United States. And we do in Chippewa Falls for SGI; we do in Houston, to some degree, for our enterprise group. But the entire supply chain — everything from memory, from motherboards, I mean everything that is in our products comes from overseas. And by the way, that supply chain has taken 30 years to set up. So when all those components come in and are taxed, it’s not going to be good for companies that have a relatively low margin and a big offshore supply chain.”
She added that she is working with Congress to make sure that this point of view is well understood.
Her comments follow Trump’s favourable comments about the proposal in an interview with Reuters on Thursday.
“It could lead to a lot more jobs in the United States,” he told Reuters, using his most positive language to date on the proposal. However, he did not specifically endorse it.
“I certainly support a form of tax on the border,” he added. “What is going to happen is companies are going to come back here, they’re going to build their factories and they’re going to create a lot of jobs and there’s no tax.”
Trump previously sent conflicting signals about his position on the tax proposal. In an interview with the Wall Street Journal in January he said it was “too complicated.” He added: “Anytime I hear border adjustment, I don’t love it. Because usually it means we’re going to get adjusted into a bad deal. That’s what happens.”
But then shortly after he told Axios that, “It’s certainly something that’s going to be discussed. […] I would say, over the next month-and-a-half, two months, we’ll be having more concrete discussions.”
Separately, the New York Federal Reserve said in a post Friday February 24 that the proposed border tax adjustment “is unlikey to promote US exports.”