BAT Tax Could Have Big Impact On Golf Equipment Industry

Morning Read's Alex Miceli considers the golf equipment industry ramifications of a Border Adjustment Tax, proposed by Paul Ryan (R-Wis.) and Rep. Kevin Brady (R-Texas) and now sounding like something President Donald Trump might endorse.

The 20% tax on imports is designed to keep manufacturing in the United States, and with all but Titleist/Callaway/Taylor Made* golf balls and a handful of other products made outside the US borders, customers are likely to see price increases on golf clubs. Miceli writes:

Considering the difficulties in the golf business, narrowing profit margins is not an acceptable alternative. The obvious counter to the BAT would be to start manufacturing in the U.S., but that move would be a challenge.

Manufacturing facilities that can cast clubheads are in short supply in the U.S., and the expertise is not as readily available. Plus, the cost of manufacturing in the U.S. is what forced these companies to move production overseas, much of it to Asia, in the first place.

“I just think it's a cost analysis, which is we need to bring our products to market in a way that's conducive for consumers to be able to get into those products and a large quantity consumers to get into those products, and to be that you have to be positioned and market in the right place,” David Abeles, the chief executive and president of TaylorMade-Adidas Golf, said after a pro-am round last month at the AT&T Pebble Beach Pro-Am.

Brett Conrad has penned this op-ed for Forbes against the concept, while Alan Auerbach and Michael Devereux just published an NY Times op-ed case for the tax.