DELAY IN CITY OF TRENTON’S EFFORTS TO RAISE TOBACCO PURCHASE AGE TO 21
CHANGES (AND PROPOSED CHANGES) IN THE TRUMP ADMINISTRATION
THESE ISSUES AFFECT GASOLINE, CONVENIENCE STORE, AND AUTO REPAIR BUSINESSES

First I would like to apologize for not sending the Road Warrior last week.  From time to time my schedule keeps me from finding sufficient time to pen a weekly newsletter, and last week was one of those times.
 
In the beginning of the year we received news that one of the City of Trenton’s first actions in the New Year would be an effort to raise the age to purchase tobacco to 21 years old.  A hearing was scheduled for earlier this week, and I was prepared to get beat up and insulted like I always do, by these municipal governments which accuse me of representing “big tobacco” as opposed to the small business owners whom I actually represent. I’ve stated before how insulting some local officials have been to me when I’ve testified at the public portion of the meeting. Some of the insults hurled at me in public meetings include “despicable” (my personal favorite), “shameful”, “selfish”, and of course “greedy”.  I’m a big boy and can handle it; in fact I smirk back and wear their insults like a badge of honor.  However, last night not only did I not receive any insults, I was actually thanked for sending letters on behalf of small business owners. Trenton City Council did not pursue this proposal, and is now introducing another ordinance to repeal the ordinance which was originally introduced to raise the tobacco purchase age to 21.  I’ll consider last night a success!!
 
Next, as you are no doubt aware, since the new President took over two weeks ago there has been a lot of talk about the dramatic changes that may be coming from the federal government. I want to give you a very brief overview of some of the issues that have come up which have the potential to affect your business most directly. While there has been a lot of talk and bluster, so far very little has actually been done, right now most of what we have is speculation about what may be done. My trusted advisor (I call him my consigliore) Eric Blomgren, who many of you have met, has compiled some of the issues being debated in Washington right now since inauguration day.
 
The President reversed the Obama Administration’s decisions to block the construction of two major pipelines, the Keystone XL and the Dakota Access Pipelines. Once these are eventually built and come online, they should allow oil from western Canada and the Bakken in North Dakota to reach market more easily, bringing lower oil and fuel prices.
 
There has been a lot of talk about repealing the Affordable Care Act (Obamacare), but it's unclear what it would actually be replaced with. Some Republicans in Congress are acting like the dog that finally caught the car, and now doesn’t know what to do with it. The main concern is to not do anything that will leave people who have Obamacare-provided insurance totally uninsured. While we don’t know what will happen, the odds are very good that the employer mandate will never be put into effect.
 
The costly regulation which changes the overtime rule has been frozen by the courts pending a lawsuit over whether the Obama Administration exceeded its authority in making the changes they did. Either way, the leadership of the Republican Congress has specifically targeted it for repeal, and are moving in that direction now.
 
The massive Dodd-Frank Financial Reform Bill passed early in Obama's Administration has been targeted by Republicans for some time. There is one provision in that bill, the “Durbin Amendment”, which has led to tremendous savings on debit card fees in the last 6 years. In fact, here in New Jersey we have been advocating for a bill to enact the same legislation, only for credit cards. We will be monitoring this issue in DC closely in case there is an attempt to repeal this part of the law, an action which would mobilize every retailer group in the country.
 
There has also been a lot of talk about trade policy. As you know, President Trump is interested in enacting special taxes (tariffs) on products made outside the US. Leaders in the Republican Congress have proposed a “border adjustment tax” of 20% on the value of everything imported into the US. They plan to use this big tax increase to fund a cut to the corporate tax rate.
 
Depending on how such a tax is implemented, it could lead to significantly increased costs for some retailers. One big question is whether oil imports will be subject to the tax. This could lead to a meaningful increase in the wholesale price of all petroleum products in the US. About 40% of US oil is imported, with Canada being by far the largest supplier, followed by Saudi Arabia, Venezuela, and Mexico.
 
Many auto repair shops could also be hurt as a large percentage of auto parts are manufactured over the border, particularly in China and Mexico, two countries that may be hit with extra high tariffs, given the President’s rhetoric. If the cost of auto parts jumps say 20%, that cost would have to be passed on to the motorist, perhaps making it less likely they have their repairs completed at all. The President would hope that such taxes and tariffs would encourage manufacturers to simply move factories to the US. That will be very nice for the handful of individuals who get jobs at those factories, but the higher wholesale prices on products will lower the standard of living for everyone else.
 
Again, this is all hypothetical and it’s impossible to know how any of this will work out, and even if anything will be accomplished at all (remember, this is federal government we’re talking about). We are keeping an eye on all of it and will keep you informed of decisions and laws that will affect your business.  Eric and I are planning a few trips to Washington in the next few months so that we can weigh in on your behalf with some of the issues that will be facing your business.  I look forward to reporting our findings.

Thanks for reading -- See you all next week!

Sal Risalvato
Executive Director