Trump's proposed border tax will hit these industries the hardest

President-elect Donald Trump last week said General Motors would face a "big border tax" for making a model of the Chevy Cruze in Mexico.

This followed his earlier warnings that US companies would face consequences for making US-sold products abroad. Companies sometimes move production offshore because it's cheaper. In Trump's view, this costs Americans jobs.

One aspect of tax reform that House Republicans have proposed is a border-adjusted tax that would make it more expensive for US companies to bring back their products for domestic sale. The risk, however, is that other countries could retaliate with their own tariffs on US exports.

RELATED: Trump's official picks for cabinet and administration:

Trump's official picks for Cabinet and administration positions
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Trump's official picks for Cabinet and administration positions

Counselor to the President: Kellyanne Conway

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Veterans Affairs Secretary: David Shulkin

(Photo credit DOMINICK REUTER/AFP/Getty Images)

Transportation secretary: Elaine Chao

(Photo By Bill Clark/CQ Roll Call)

Energy secretary: Rick Perry

(Photo credit KENA BETANCUR/AFP/Getty Images)

Secretary of State: Rex Tillerson

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Secretary of Defense: Retired Marine General James Mattis

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Chief of staff: Reince Priebus

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Chief strategist: Steve Bannon


Attorney General: Senator Jeff Sessions

(Photo By Bill Clark/CQ Roll Call)

Director of the CIA: Kansas Rep. Mike Pompeo

(Photo By Bill Clark/CQ Roll Call)

Deputy national security adviser: K.T. McFarland

(Photo by Michael Schwartz/Getty Images)

White House counsel: Donald McGahn

(Photo by Drew Angerer/Getty Images)

Ambassador to the United Nations: South Carolina Gov. Nikki Haley

(Photo by Astrid Riecken For The Washington Post via Getty Images)

Education secretary: Betsy DeVos

(Photo By Tom Williams/CQ Roll Call)

Commerce secretary: Wilbur Ross

(Photo by Andrew Harrer/Bloomberg via Getty Images)

Homeland security secretary: General John Kelly

(Photo by Drew Angerer/Getty Images)

Housing and urban development secretary: Ben Carson

(Photo credit NICHOLAS KAMM/AFP/Getty Images)

Administrator of Environmental Protection Agency: Oklahoma Attorney General Scott Pruitt

(Photo by Spencer Platt/Getty Images)

Health and human services secretary: Tom Price

(Photo by Alex Wong/Getty Images)

Department of Homeland Security: Retired General John Kelly

(REUTERS/Joshua Roberts)

Secretary of agriculture: Sonny Perdue

(BRYAN R. SMITH/AFP/Getty Images)

The potential impact of tax reform including new border taxes is why two of Goldman Sachs' preferred equity strategies include baskets of companies with high tax rates and high domestic sales. "Firms with the highest median effective tax rates for past decade (38%) will benefit from tax reform," said David Kostin, the firm's chief US equity strategist, in a note on Friday. Also, companies that produce mostly in the US face less risk from trade and currency disruptions.

The chart shows which industries face the most and least risk from taxes that would penalize companies for offshoring production, based on the share of domestic supply that's imported.

Screen Shot 2017 01 09 at 9.25.27 AMREUTERS/Andrew Biraj

Apparel tops the list by far.

"Apparel retailers have a relatively large proportion of goods that are imported (particularly as they tend to be more vertically integrated)," said Ike Boruchow, a senior analyst at Wells Fargo, in a recent note. "However, the main difference is the high level of domestic sales. Thus, considering the high imports and high domestic sales, this makes apparel retailers one of the groups most at risk in the new tax policy environment."

Off-price retailers like Burlington Coat Factory and Ross Stores are best positioned because they import virtually no goods from abroad, Boruchow said.

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