Target demands that suppliers absorb tariff costs to protect consumers

A shopper carries shopping bags from Target Corp. walking around New York.

Nathan Dvir | Bloomberg | Getty Images

As companies scramble to meet new tariffs imposed on Chinese products, Target is asking its suppliers to absorb the increased costs so consumers are not affected.

In a letter to suppliers dated Aug. 27 and viewed by CNBC, Target said it “will not accept any further cost increases related to tariffs on goods imported from China.”

The memo, signed by merchandising director Mark Tritton, says the big-box retailer expects suppliers to “develop appropriate contingency plans so that we don’t have to pass on price increases to our clients”.

“As we’ve communicated for some time, as a customer-focused retailer, we remain concerned that fares will drive up prices for American families,” a Target spokeswoman told CNBC in a statement. sent by email.

“Given the scope of our business and the breadth of our assortment, including own and national brands, we have had to take a number of steps to manage our business accordingly and keep prices low for customers. We have written letters to the US Trade Representative, conducted ongoing negotiations with our supplier partners, and conducted contingency planning with our supply organization and more.Our goal remains to put our customers first and to to deliver the most value possible to consumers through our multi-category business.

A 15% tariff on $112 billion worth of goods from China went into effect on Sunday, five days after Target’s letter was distributed.

Companies have used other strategies to lessen the impact of duties, including diversifying supply chains to countries other than China and timing shipments ahead of the imposition of tariffs. According to the American Apparel and Footwear Association, 92% of clothing imported from China was hit with tariffs on Sunday.

Target also warned the US government that consumers, who would see price increases, would be victimized by tariffs.

“Put simply, additional tariffs on these products will force new families to spend more or compromise on the products they can purchase for their family,” Tritton previously said in a June letter to the U.S. Representative in Trade, Robert Lighthizer.

Target’s stock is up 62% since January, bringing it to a market value of $54.9 billion. According to Kantar Consulting, Target was the eighth largest retailer in 2017, with over 1,800 stores.

The Wall Street Journal first reported on Target’s memo on Wednesday evening.

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