TIME FOR A TUNEUP

Auto parts party may end if border tax passes

President-elect Donald Trump’s public pressure on Detroit to keep auto manufacturing jobs in the USmaysoon include a related industry — auto part retailers, The Post has learned.

Stores including Advance Auto Parts, AutoZone and O’Reilly Auto Parts operate on fat margins created by importing a large percentage of their inventory from low-cost countries, insiders said.

But a Trump-supported House tax reform plan takes direct aim at those margins.

If fully implemented, the border tax reform plan would prevent companies from subtracting from their gross profit the cost of goods made overseas and sold in the US, a source close to the Trump transition team said.

That would increase their taxable income and squeeze their margins.

“It is a pretty significant change to the code,” said Kyle Pomerleau, director of federal projects at the Tax Foundation.

Pomerleau estimates that such a border tax change could raise $1.1 trillion over 10 years — even if corporate tax rates are lowered to 20 percent.

Proponents of a border tax believe it will encourage companies to make more products domestically.

While such a tax move will affect all companies that im- port goods, it could impact the shares of auto parts retailers disproportionately because Wall Street, perhaps blind to the possible ramifications of Trump’s border tax reforms, have pushed shares of the auto part chains up sharply since Election Day.

One Wall Street analyst said the stock runup — Advance Auto Parts is up 25 percent since Nov. 8 — was the result of the expectation that the chains, which typically pay a 30 percent-plus tax rate, would pay lower taxes under Trump.

One analyst admitted that some may have not fully appreciated the border tax plan.

“We are trying to figure out how much of our product is imported,” a source at one of the auto parts retailers said, referring to the potential impact of a border tax.

Auto part retailers have been increasing their margins in recent years by promoting their private-label brands, typically sourced from China and other low-cost countries.

AutoZone, for example, imports roughly 70 percent of its parts, a top car industry executive told The Post, requesting confidentiality.

The executive said he expected investors to take note of the change — and how it will affect the companies’ profits — very soon.

“I bet the question will get asked [of the retailers] this quarter during conference calls with Wall Street,” one analyst, speaking on the condition of anonymity, told The Post.

Last year, the US imported $25 billion in auto parts from China and exported only $2.5 billion, and most of the imbalance came from aftermarket suppliers including retailers, the executive said.

Detroit’s original equipment suppliers are not expected to be hit as hard by any import tax law changes.

They make many of their parts in the US because they need to react quickly to automaker demands.

A change in the import tax law would be softened, proponents said, by a reduction in the corporate tax rate.

An AutoZone spokesman said, “It is just too early in the process for us to comment.”

O’Reilly declined comment, and Advance Auto did not return calls. Trump’s spokesperson declined comment.