Stacey Widlitz, founder of SW Retail Advisors, breaks down the latest news in retail as businesses prepare for the holiday season.
Dollar Tree said Wednesday that it may adjust or eliminate certain products if President-elect Trump's proposed tariffs go into effect.
The discount retailer, which has high exposure to China, told analysts that if additional tariffs materialize, it may change product details or sizes, or scrap products altogether if additional tariffs are incurred. He told analysts there was a “wide range of potential actions” that could be taken to mitigate the impact. Too expensive.
Under the proposal, a flat 10-20% tariff would be imposed on all foreign imports, and an additional 60-100% tariff would be imposed on imports from China in particular. Last month, President Trump repeated his threat, saying that after taking office, he would issue an executive order imposing 25% tariffs on all goods imported into the United States from Mexico and Canada.
Experts say President Trump's proposed tariffs could push up food prices
Dollar Tree said the last time it faced this issue was in 2018 and 2019, when it adjusted its products and negotiated cost reductions with suppliers.
“These options are still at our disposal,” interim CEO Michael Creedon told analysts on Wednesday's earnings call. “Additionally, we are currently making detailed plans to move the source of most of our products to other countries, and multi-pricing will give us further flexibility in our product range.”
February 16, 2024, Dollar Tree Store in Kingston, New York. (Angus Mordaunt/Bloomberg via Getty Images/Getty Images)
Dollar Tree direct imports amount to 43% of its total retail value, with the majority coming from China, according to regulatory filings.
“The majority of our direct imports come from China, and we believe that a significant portion of the products we purchase from domestic vendors are imported,” the company said in a March 2024 filing. .
Dollar Tree lost its CEO last month and continues to battle lackluster demand and a competitive environment, but a range of economists and retailers, including heavyweights such as Walmart, have argued that tariffs are not a viable option for business. It is the latest in a series of companies commenting on how it will affect the world.
Goldman Sachs: Trump tax cuts and deregulation will boost growth. Tariffs could be a drag
Walmart Chief Financial Officer John David Rainey warned that tariffs would be “inflationary”.
Dollar Tree July 28, 2014, Miami, Florida. (Joe Radle/Getty Images/Getty Images)
“Consumers are probably going to end up paying more for the items they buy and the items that are subject to tariffs,” he told FOX Business.
Rainey said that while two-thirds of the products it sells are manufactured, grown and assembled in the United States, the company is “not immune to this.”
Goldman Sachs warned in a memo that Trump's proposed plan would impose additional taxes on 43% of U.S. imports. push up inflation further It increased by nearly 1%.
“Using our rule of thumb, every 1 [percentage point] An increase in effective tariff rates will raise the core [personal consumption expenditures] “PCE will rise by 0.1%, but we estimate that the proposed tariff increases, if implemented, would push core PCE prices up by 0.9%,” said Goldman Sachs economists Alec Phillips and Ronnie. A memo written by Mr. Walker states:
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Caroline Leavitt, the Trump Vance transition press secretary whom President Trump nominated to be his post-inauguration press secretary, previously told Fox Business that the tariffs imposed on China during President Trump's first term “did not create jobs. , promoted investment and did not cause inflation.”
He said President Trump will restore the economy in part by “re-securing American jobs, lowering inflation, raising real wages, cutting taxes, reducing regulation and untying American energy.” He said he plans to do so.
