Retail Giant Target, Which Relies On China For 30% Of Its Merchandise, Warns Of Profit Hit As Trump's Trade War Bites

Target Corp. TGT has warned that President Donald Trump‘s tariffs could erode profits as the retail giant faces a combination of economic headwinds and consumer backlash over its recent retreat from diversity initiatives.

The retailer, with nearly 2,000 stores nationwide, expects “meaningful year-over-year profit pressure” in the first quarter that began Feb. 2, citing “tariff uncertainty” among other factors.

While CEOs publicly maintain measured responses to Trump’s trade policies, private concerns are mounting. Jeffrey Sonnenfeld from Yale School of Management told NPR that business leaders are “very discouraged” about the administration’s approach, with about 80% of CEOs in a recent gathering admitting they’ve been “apologizing to international partners for Trump’s capriciousness.”

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Target appears especially vulnerable to tariff impacts, with over 75% of its sales coming from general merchandise—a lot of it sourced from imports, the Financial Times reported. The company has been working to reduce exposure, with Chief Commercial Officer Rick Gomez saying during an earnings call that Chinese-made goods now represent about 30% of Target’s merchandise, down from 60% in 2017.

The retailer’s shares have declined 36% over the past year while the S&P 500 gained more than 9%, despite sliding into correction territory this week.

Beyond tariffs, Target faces weakening consumer sentiment. “Our topline performance for the month was soft, as uncharacteristically cold weather across the U.S. affected apparel sales, and declining consumer confidence impacted our discretionary assortment overall,” Jim Lee, Target’s chief financial officer, said in the company's latest earnings release.

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The company now forecasts “around flat” comparable sales growth for 2025, potentially marking a third consecutive year of stagnant or declining sales.

The uncertainty has prompted engagement between corporate leaders and the White House, with Trump meeting the Business Roundtable CEO group this week in a gathering that set attendance records, NPR reported.

Despite market volatility, business leaders remain publicly diplomatic. Goldman Sachs GS CEO David Solomon told Fox Business on Wednesday that he thinks "the business community understands what the president is trying to do with… tariffs.” though he acknowledged companies are “always going to want lower tariffs everywhere."

For now, many CEOs appear to be weighing tariff concerns against potential benefits from Trump’s promised tax cuts and deregulation.

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