R.I.P. Border Adjustment Tax: Canadian Implications

Yesterday afternoon, the so-called "Big 6" (comprised of key Republican leaders from the White House and Congress) released a short and fairly vague mission statement for their "shared vision" for U.S. tax reform. While it is only five paragraphs long, the Joint Statement on Tax Reform (the Joint Statement) delivered major relief to Canadian businesses – it confirmed that the hotly contested border adjustment tax (BAT) will not be included in U.S. tax reform.

The BAT (summarized in our prior update) would have effectively imposed U.S. tax on imports into the United States while exempting U.S. exports. U.S. industries dependent on foreign imports, such as retailers and refiners, were staunchly opposed to the BAT. They argued that it would cause a debilitating increase in costs of foreign products, unfairly prejudice their business and result in increased costs for ordinary Americans. While there were competing hypotheses on whether currency adjustments and other