US retailers Walmart and Target are struggling with tariffs imposed by President Donald Trump, highlighting the growing divide between the two companies. Walmart will raise prices to offset tariff costs, while Target has taken a more cautious approach, hesitant to increase prices despite its own financial challenges.
Target’s same-store sales have underperformed Walmart’s over the past three years, and the company is experiencing higher shrink rates and markdowns. However, Walmart’s diversification into advertising and memberships has helped improve profitability. The retailer generates a third of its sales from merchandise sourced primarily from China, India, Vietnam, and other countries.
Tariffs have slammed Target’s margins, with investors unconvinced by the company’s plans to offset exposure through negotiations with vendors and adjustments to assortment decisions. Analysts warn that 30% tariffs on goods from China would make it difficult for Target to absorb increased costs without raising prices.
Walmart’s scale and negotiating power with suppliers give it an advantage in dealing with tariff costs. The retailer has seen significant gains in sales and market value, boosted by record memberships at Sam’s Club and booming sales in India and China.
Source: https://www.reuters.com/business/walmart-vs-target-tariffs-highlight-growing-divide-fortunes-2025-05-22