A group of about 60 small business owners headed to Washington earlier this month in an effort to convince Congress to drop the border-adjustment tax from their plans for US tax reform. They are the latest in a succession of business leaders, led by large retailers such as Target, Best Buy, and Autozone, to oppose the measure, which is a core component of the Congressional Republican Blueprint on tax reform.

Like any controversial legislative proposal, the border-adjustment tax has spawned a great deal of conjecture about what the potential impacts could be. While the National Retail Federation published a study that finds the tax could translate into a 15-percent price hike on consumer products (an additional $1,700 per family per year), large manufacturers, such as Boeing and Dow Chemical, have publicly urged Congress to implement the tax, suggesting it would make US-manufactured goods more competitive abroad and in America.

So, who’s right? Is the border-adjustment the death knell for capitalism or the savior of the US manufacturing economy? Right now, it’s still too early to know for sure.

For starters, few people outside the world of corporate taxation really understand how a border tax would work. Put simply, it is a form of value-added tax (VAT) that is applied to imported goods. But it’s also part of a much larger plan outlined in the Republican Blueprint, which proposes a territorial tax system whereby goods and services are taxed based on where they are sold, as opposed to the current system, which taxes them based on where they are manufactured. By switching to this territorial system, US lawmakers hope to simplify the tax code, eliminate the incentive for US companies to keep their overseas profits offshore, and incentivize domestic manufacturing.

To help bring some clarity to all of the noise surrounding the border-adjustment tax, we’ve conducted our own very basic analysis of the potential impact of the tax on a net importer and a net exporter. Borrowing real-world financials from well-known retailers and manufacturers, we created two composite companies and applied the border-adjustment tax – as proposed in the Republican Blueprint – to their financials.

The results were not pretty for the retailer. Assuming the company generated $69.5 billion in total revenue in 2016, of which $38 billion was attributable to imported goods, the large retailer in our example would have made $3.2 billion in after-tax profit under the existing tax code and at the existing corporate tax rate of 35 percent. With the border-adjustment tax and a reduced 20 percent corporate tax rate applied to those same figures, that $3.2 billion profit instantly turns into a $3.6 billion loss. This happens because the retailer is importing the majority of the goods it sells, so the border-adjustment tax weighs very heavily on its total revenue.

Turning the tables, we applied the same analysis to a hypothetical manufacturer that derives the majority of its profits from exports. That company generated $95 billion in total revenue in 2016, $78 billion of which was attributable to exports. The manufacturer would earn $4.2 billion under current tax law and $11.8 billion under the border-adjustment tax scenario.

These calculations are admittedly back-of-the-envelope estimates, but they illustrate the major dilemma with the border-adjustment tax. Retailers that import a large portion of the goods they sell in the US would face significantly higher tax bills and would likely need to pass along some of that cost to consumers in the form of price increases. Following our example, retailers would need to raise prices over 12 percent to offset the border-adjustment tax (non-currency adjusted). However, they would also be incentivized to seek domestic sources for some of the goods they are selling, which could affect the kind of behavioral change the US government is trying to encourage. But it would not happen overnight.

Likewise, manufacturers seeking to maximize their profits would likely, over time, seek to move as much of their global operations into the US as possible. However, it is important to note that moves like this do not happen quickly and rarely ever happen in a vacuum. Countermeasures by other governments around the world could certainly be a factor, not to mention the currency fluctuations that could be spawned by large scale changes in manufacturer and retailer behavior.

These slower-moving macroeconomic variables, along with the details on various deductions, credits, and other factors, can heavily influence the equation as new tax laws are phased into effect. That, of course, means it will really be impossible to evaluate the true impacts of the border-adjustment tax until a full plan, complete with related tax legislation, can be digested and interpreted by each individual company it will effect.

While generalized snapshots of how the tax proposal could potentially impact one industry over another are useful for framing the discussion, they should not be the final word in determining whether a proposal is good or bad for business. That judgment can only come from the businesses themselves applying a full spectrum of economic variables to their balance sheets.

The one thing we do know for certain at this point is that companies facing potentially significant disruption at the hands of sweeping US tax reform would be wise to start plotting possible scenarios now and planning for a number of potential outcomes over the next several months – possibly years – of legislative uncertainty when it comes to the optimal supply chain footprint.

Taneli Ruda is senior vice president of strategy and managing director of global trade tax & accounting for the Tax & Accounting business of Thomson Reuters.