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Target and tariffs: The retailer has plans to limit higher prices

USA TODAY logo USA TODAY 5/22/2019 Zlati Meyer

Target plans to lessen the impact tariffs will have on the retailer’s prices.

Company officials explained during the first-quarter analyst call on Wednesday that the Minneapolis-based big-box chain had contingency plans in place.

Earlier this month, the Trump administration increased the tariffs on $200 billion in Chinese imports from 10% to 25% and has threatened to add a 25% tariff on the majority of the rest of the $325 billion of merchandise the U.S. imports from China.

Target "has been able to manage through last year's tariffs with minimal impact, and we have plans in place to mitigate the impact of additional tariffs already scheduled for next month," said CEO Brian Cornell. "As always, we remain focused on being priced competitively every day, delivering value for our guests while judiciously managing our margins.

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He also credited the fact that Target sells so many different products for allowing the big-box chain to balance itself.

"Our ability to flex our focus from category to category is something that's somewhat unique to Target versus single-category retailers," Cornell said.

A Target spokesperson later declined to explain what the contingency plans were.

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Brian Yarbrough, senior research analyst at the investment firm Edward Jones, isn't convinced Target is as insulated as it's presenting itself to be. He said he'd "be shocked if there's a way to pull that off" and compared Target to Walmart, which last week warned that it may have to raise prices if the next wave of tariffs comes to be.

"If Walmart raises prices, it gives them leeway. Because they’re the 800-pound gorilla, will Amazon use this as a way to gain share and Walmart and Target have to pull back?" he said. "Suppliers will feel some pressure, retailers will feel some pressure and consumers will feel some pressure."

Follow USA TODAY reporter Zlati Meyer on Twitter: @ZlatiMeyer

This article originally appeared on USA TODAY: Target and tariffs: The retailer has plans to limit higher prices

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