The latest round of tariffs on Chinese-made goods will raise the cost of millions of everyday consumer items. But Target Corp. does not want to pass any increase along to shoppers. Instead, it is telling suppliers to eat the costs.
In a pointed memo to hundreds of national-brand vendors who import goods from China, Target's chief merchandising officer, Mark Tritton, made clear that the Minneapolis-based retail chain "will not accept any new cost increases" related to the new levies that went into effect Sunday.
"Our expectation is that you will develop the appropriate contingency plans so that we don't have to pass price increases along to our guests," he wrote.
The Aug. 27 memo, first reported by Oregon Public Broadcasting, highlights the ripple effect of the Trump administration's ongoing trade war with China and the potential effect on the wide swaths of the U.S. and global economies.
Target and other large importers of Chinese goods — including Walmart, Richfield-based Best Buy, Dollar Tree and the footwear industry — have voiced concerns the burden the tariffs would place on consumers, whose spending provides the lion's share of fuel to the American economy.
Because of its market power, Target and other national players can more easily squeeze suppliers than smaller retailers, who may have no choice but to raise prices on the shelves.
"I am not entirely sure if this is a good thing for long-term supplier relations," GlobalData retail analyst Neil Saunders said about Target's move on the industry news site Retail Wire. "But it is the easiest way for a retailer to try and deal with the problem of rising costs."
Tariffs on Chinese goods have been in place for about a year, but had not hit consumer goods with such widespread force until Sunday. The latest levy adds a 15% tax on $111 billion in imports such as shoes, pens and pencils, diapers, golf clubs and electronics. The number of affected items runs 114 pages, single-spaced.
