Coke CEO: Border tax wouldn’t hurt but ‘rhetoric’ could

Kent says company insulated but larger ramifications vexing

President Trump’s proposed border tax wouldn’t hurt CocaCola directly, but the company could suffer if “this kind of rhetoric” continues, CEO Muhtar Kent said Thursday.

Kent told reporters Coke would be largely insulated from the effects of a Trump border tax on products imported to the U.S. because of its strategy of making products where it sells them.

“We distribute locally, we sell locally, and we pay taxes locally,” he said. “So from our perspective, obviously, it’s not going to make a difference to our business in a micro sense.”

But the possibility of larger ramifications is concerning, he said on a conference call sched- uled to discuss the company’s fourth-quarter earnings report.

“On a macro sense, this kind of rhetoric is also somewhat worrying because it will have a negative impact on global trade. That will also play into further sentiment that is not positive, and that will then play into the GDP growth rate and disposable income growth rates,” Kent said.

Kent, who will relinquish his post as CEO on May 1 but remain as chairman, called Coke a “multilocal business” with production in more than 200 countries.

The company reiterated Thursday it believes corporate tax reform, which Trump and the Republican Congress have endorsed, could help. Kent said Washington’s emphasis must be on “bringing the tax code into the 21st century and making American companies competitive.”

Coca-Cola’s fourth-quarter revenue and profit slipped as the company sold fewer drinks globally while the strong U.S. dollar and one-time items also undercut the performance. Coca-Cola’s net income fell 56% to $550 million.