As companies prepare for the holiday season, Stacy Widlitz, founder of SW Retail Advisors, breaks down the latest news from the retail sector.
dollar Tree It said on Wednesday it could adjust or even eliminate some products if President-elect Trump’s proposed tariffs go into effect.
The discount retailer, which has high exposure to China, told analysts it had “a wide range of potential actions” it could take to mitigate additional tariffs if they were implemented, including changing product descriptions or sizes. And that even includes getting rid of items altogether if they become so. More expensive.
Under the proposals, a universal 10%-20% tariff would be imposed on imports from all foreign countries, and an additional 60%-100% tariff would be imposed on imports specifically from China. Last month, Trump reiterated his threat that he would issue an executive order to impose a 25% tariff on all products coming into the US from Mexico and Canada if he takes office.
Experts say Trump’s proposed tariffs could increase food prices
Dollar Tree said the last time the retailer faced the issue, in 2018 and 2019, it adjusted its products and negotiated lower costs with suppliers.
“Those options are still with us,” interim CEO Michael Creedon told analysts on an earnings call Wednesday. “In addition to all this, we now have detailed plans to shift supply sources to alternative countries for most of our products, and multi-price provides us with additional flexibility on our product assortment.”
A Dollar Tree store in Kingston, New York is seen on February 16. (Angus Mordant/Bloomberg via Getty Images/Getty Images)
According to a regulatory filing, Dollar Tree directly imports 43% of its total retail value purchases, the majority of which is from China.
“China is the source of the vast majority of our direct imports, and we believe it is a significant part of our Goods purchased from domestic vendors Imported,” the company said in a March 2024 filing.
Dollar Tree, which lost its CEO last month and is struggling with persistently weak demand and a highly competitive landscape, is the latest in a series of economists and retailers, including heavy hitters like Walmart, who have commented that the tariffs How will it affect business?
Goldman Sachs: Trump tax cuts, deregulation will boost growth; Tariffs can be a burden
Chief Financial Officer of Walmart John David Rennie warned that tariffs are “inflation-inducing.”
A Dollar Tree store seen in Miami on July 28, 2014. (Joe Riddle/Getty Images/Getty Images)
“Consumers will likely pay more for the goods they purchase that have these tariffs applied to them,” he told Fox Business.
While Rainey said that two-thirds of the items the company sells are made, grown or assembled in the US, he said the company is “in no way untouched by this.”
Goldman Sachs warned in a note that Trump’s proposed plans would tax 43% of US imports and increase inflation further By about 1%.
“Using our rule of thumb that each 1 (percentage point) increase in the effective tariff rate will lead to a 0.1% increase in core (personal consumption expenditure) PCE, we estimate that core PCE prices will increase if the proposed tariff increase is implemented. GDP will rise by 0.9%, said the note written by Goldman Sachs economists Alec Phillips and Ronnie Walker.
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Trump-Vance transition spokeswoman Carolyn Leavitt, who was Trump’s pick for press secretary after he took office, previously told Fox Business that, during Trump’s first term, tariffs imposed on China “created jobs , promoted investment and resulted in no inflation.”
He said Trump planned to restore the economy by “reviving American jobs, reducing inflation, raising real wages, reducing taxes, cutting regulations and freeing up American energy.”
