Time for emerging markets to BAT-ten down the hatches: BofA

by Dramelin 6:00 AM 0 comments

Emerging market economies appear to be exposed to the border adjustment tax (BAT) policies proposed by U.
S.
politicians ahead of a crucial window for major tax reform, according to a team of analysts at Bank of America Merrill Lynch (BofA).
"We are perplexed at how casually (the) consensus predicts a 25 percent U.
S.
dollar rally if a 20 percent Border Adjustment Tax (BAT) is passed," a team of analysts at BofA said in a note published Wednesday.
However, several large retailers have criticized BAT and argue the tax on lower-cost imported items could be passed on to consumers.
Market expectations, should the tax reforms be implemented before the summer, are for the U.
S.
dollar to appreciate by around 15-25 percent.
U.
S.
President Donald Trump has long-advocated plans to lower tax rates for U.
S.
businesses and Republicans in the House of Representatives have since proposed the implementation of a 20 percent levy.