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Retailers cheer the death of the border adjustment tax
Republicans on Thursday said they have given up on trying to pass a border adjustment tax, prompting a rallying cheer across the retail sector.
Prior to Thursday's announcement, retailers that get many of the goods they sell from overseas had been raising concerns about the proposal, known as BAT, claiming it would pass hefty costs on to consumers.
Just last week, it looked like retailers' fight against BAT was heating back up , with the National Retail Federation sending a letter to Congress, titled, "Congress Should Focus on Income Tax Reform, Not BAT."
The border tax, originally devised and backed by House Speaker Paul Ryan , had since divided Republicans in Congress, and some of America's biggest retailers were looking to tear it apart. The proposal would have hiked prices of imported goods to the United States.
"Today's update on the status of tax reform is very encouraging, particularly since the border adjustment tax is no longer under consideration," NRF President Matthew Shay said Thursday in a statement.
"By removing this costly element of reform, the way has been cleared for swift action on a middle-class tax cut that will put more money in the wallets of the American taxpayer. Changing our outdated tax code is fundamental if we are to grow our economy, encourage investment and create jobs."
Retail stocks and the S&P 500 Retail ETF (XRT (NYSE Arca: XRT)) traded higher Thursday afternoon following the proclaimed death of BAT.
Target (TGT) and J.C. Penney (JCP) stocks were up about 2 percent; Best Buy (BBY) shares were trading nearly 3 percent higher; Macy's (NYSE:M) stock was up more than 3 percent, and Sears (SHLD) shares were up about 4.8 percent.
"With BAT off the table, retailers [are] ready to advocate for tax reform," the Retail Industry Leaders Association said in a statement.
"With BAT out, Washington has an opportunity for the first time in more than a generation to pass a tax reform plan that boosts American businesses and family budgets," RILA President Sandy Kennedy said.
"As the nation's largest private-sector employer, retailers are ready to work with lawmakers to pass tax reform that lowers corporate rates, scrutinizes deductions, keeps America competitive globally, and creates a level playing field here at home."
Republicans have now reiterated their goal of starting to work on a joint tax plan through committees by this fall. Many questions remain about what shape the plan will take. While the White House released a brief summary of its goals for tax reform earlier this year, it has released little about specific policy since.
WATCH: Tax plan will not include a border tax
— CNBC's Jacob Pramuk contributed to this report.
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