Passé America? Fashion Chain Threatens to Shut Stores if Import Tariffs Rise

One of the world’s fastest-growing clothing chains could beat a very fast retreat from the U.S. if Donald Trump gets his way.

The founder of Japan’s Uniqlo, which operates in more than a dozen countries, said he’d shut all 50 of its U.S. stores if new tariffs were slapped on imports.

Retailers rely on imports to stock their shelves and many fear new taxation—whether through the proposed 20% border-adjustment tax or tariffs as high as 45% on goods sourced from individual countries such as China—would push up product prices and crimp their profits.

Speaking in New York this week, Tadashi Yanai, who also is CEO of Uniqlo’s parent company, Fast Retailing, said such taxes would make functioning too hard. “It is not a good decision for consumers—it is meaningless to do business in the United States,” he told Japanese news outlet Asahi Shimbun.

“IT IS NOT A GOOD DECISION FOR CONSUMERS. IT IS MEANINGLESS TO DO BUSINESS IN THE UNITED STATES.”

His warning has profound implications for consumers, who could end up with less choice and lower price competition, should foreign retailers flee. Local companies, however, could benefit from having the market more to themselves—though you’d still be hard pressed to find an American retailing CEO salivating at the prospect of taxes that could, at least in the short run, dramatically increase the costs of their products.

The way imports and exports are taxed is looming as a possible stumbling block in White House efforts to overhaul the tax code. CEOs, in general, are excited at the prospect of a reduction in the headline corporate tax rate, though they’re still deeply divided on whether a border-adjustment tax should be included to help pay for reform.

Yanai appears to be the first CEO of a major foreign company to speak of pulling out of the U.S. market, which has ultimately become more vibrant thanks to the arrival of other so-called fast-fashion retailers, such as Sweden’s H&M and Spain’s Zara.

Yanai said his company, which has yet to turn a profit in America, is capable of opening up to 30 new outlets a year. It wants to scale up in areas around Silicon Valley and large cities such as New York and Boston. Its strategy also involves building a new U.S. logistics center and using aircraft to move products around the country.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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