Target Gets Breathing Room As Trump Delays Tariffs, But Profit Concerns Remain

Target Corp TGT received temporary relief Thursday when President Donald Trump announced a month long delay on tariffs for Mexican imports covered by the United States-Mexico-Canada Agreement until April 2, just days after the retail giant warned of “meaningful year-over-year profit pressure” due to trade uncertainty.

The retailer, with nearly 2,000 stores nationwide, remains particularly vulnerable to trade disruptions with more than three-quarters of its sales coming from general merchandise like apparel, electronics and home decor—much of it imported, according to the Financial Times.

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Target told investors during its earnings call Tuesday that it expected substantial profit challenges in the first quarter, citing “tariff uncertainty” among several factors alongside weakening consumer confidence and declining February sales. The company’s forecast of “around flat” comparable sales for 2025 would mark a third straight year of stagnant or declining sales performance.

“During February, we saw record performance around Valentine’s Day. However, our top-line performance for the month was soft, as uncharacteristically cold weather across the US affected apparel sales, and declining consumer confidence impacted our discretionary assortment overall,” Jim Lee, Target’s chief financial officer, told investors.

While Trump’s tariff postponement offers temporary breathing room, the underlying business challenges remain. Target’s shares have declined nearly 35% over the past year, significantly underperforming compared to the 12.25% rise in the S&P 500, as inflation-strained consumers pull back on discretionary spending.

Commerce Secretary Howard Lutnick indicated that Canadian tariffs might also see a similar postponement, though no official announcement had been made by late Thursday, CNN reported.

Trump announced the Mexican tariff delay after speaking with Mexican President Claudia Sheinbaum, writing on Truth Social that it was “an accommodation, and out of respect for, President Sheinbaum.”

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The delay pushes the tariff implementation to April 2, contingent on Mexico and Canada showing “significant progress” in addressing border security and fentanyl trafficking concerns—leaving retailers like Target in continued uncertainty, according to CNN.

For Target, which reported fourth-quarter net profit of $1.1 billion—near the high end of its guidance—the respite may provide time to adjust supply chains, but the fundamental challenges of shifting consumer spending patterns, increased competition from Walmart WMT, and overall retail sector pressures continue, the FT reported.

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