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Lee Schafer: Will tariffs hit Target's customers or its suppliers?

Lee Schafer, Star Tribune (Minneapolis) on

Published in Business News

It's not clear Target literally meant what it said last week by insisting suppliers hold the line on prices and bear the whole burden of new tariffs on Chinese imports. But it was a helpful reminder of how companies with a lot of market power, like Target, really act.

When faced with a problem, they make it their suppliers' problem.

The retailing industry hasn't been quiet about tariffs, with the basic lobbying pitch that tariffs are costs that inevitably flow through into the prices American consumers pay. This means new taxes aimed in the general direction of the Chinese government instead will hit regular Americans.

And while that's certainly true, tariffs reshape economic activity in lots of different ways. It's not always easy to know who bears how much of the burden.

The top four American importers on the annual ranking published by the Journal of Commerce are all retailers. Walmart is the biggest, followed by Target, The Home Depot and Lowe's. Target last year brought in about 630,000 standard shipping containers of stuff.

In a formal comment on proposed tariffs in June, Target chief merchandising officer Mark Tritton wrote that they will "further hurt American consumers, especially budget-conscious parents who are concerned about their children's safety, mental and physical development and comfort in everyday life.

 

Just before the latest tariff kicked in, Tritton's message to Target suppliers was a little different. In a note that leaked, he wrote that Target "will continue to keep guests at the heart of our strategy" and thus "Target will not accept any new cost increases related to tariffs on goods imported from China."

Just to be clear about what we're talking about, a tariffs is simply a tax. American companies that import products must record the shipments and then send in the money.

As tariffs have been announced, the government published lists of products about to get a tariff slapped on them. The latest is broken into an A and a B list. Both have products on them that Target sells, but tariffs won't hit products on the second one until after the middle of December.

That's because this list includes video games, toys and other things enjoyed during the holiday gift-giving season, and the Trump administration appeared to want to give American families a break this Christmas.

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