These 4 Retailers May Not Be as Impacted by Tariffs — Should You Shop There?
Written by
Nicholas Morine
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Amen Oyiboke
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With President Donald Trump’s tariff plan rolling out — and with it, a 10% additional tariff on Chinese goods as well as 25% tariffs on goods coming from both Canada and Mexico (so far, suspended until March 1) — American consumers may be concerned about the impact these taxes could have on retail prices.
With the U.S. average tariff rate to rise from 3% to 10.6% upon the enactment of Trump’s planned tariffs, and a disproportionate weight of this tax to be shouldered by the consumer goods sector, according to RBC Thought Leadership, price hikes appear to be inevitable.
However, some particular retailers are positioned to bear far less of the brunt than others, and may perhaps even see opportunity due to the potential trade war.
Off-Price Retailers Could Be a Boon for Retail Shoppers
Experts say off-price retailers — TJ Maxx, Marshalls, Burlington and Ross — which primarily buy excess new inventory from mainstream retailers, may be largely shielded from the impact of Trump’s tariffs.
“We view off-price as relatively insulated from tariff risk given low direct import exposure,” said Lorraine Hutchinson and Melanie Nuñez, Bank of America analysts, in a research note per Supply Chain Dive. “Off-price primarily sources product domestically, protecting them from taking on a significant incremental tariff cost directly.”
Traditional retailers drastically increase their inventory holdings ahead of a tariff imposition — a frontloading that, according to The Maritime Executive, has already occurred. This could create a buying opportunity for off-price retailers as mainstream retailers struggle to offload excess goods.
TJX Companies Chief Executive Officer Ernie Herrman told analysts in January, “[Such a stockpiling] could create actually even additional availability of goods at advantageous prices for us because we can take advantage of that opportunistically and that’s as likely a scenario as anything.”
Burlington Dodges Tariffs on 90% of Products, While Ross Holds Off on Price Hikes
Another off-price retailer, Burlington, indicated that it sources only 8% of its products from direct imports, mostly from China.
“Well over 90% of our buys are on merchandise where we are not directly paying the tariff,” said Kristin Wolfe, CFO, during a company earnings call in November 2024, reported Seeking Alpha.
Michael Sullivan, CEO, agreed, indicating that Burlington would be well-positioned to resist tariff pressure compared to its retail sector competitors.
“My experience has been that whenever there is significant uncertainty or disruption in the external environment, then while that can be a headwind and a headache for everyone, including us in the short term, the uncertainty and disruption are often very good for off-price retail in the end,” he said.
“The reason why uncertainty disruptions often work out well for off-price is that the off-price business model, when it’s well executed, is better able to handle the uncertainty and respond to whatever happens,” Sullivan added.
As for Ross, during its 2024 quarter three earnings call, Group President and Chief Operating Officer Michael Hartshorn made it clear that shoppers at its stores would be at least somewhat protected from any potential tariffs.
“Our focus in the case of a tariff increase would be to maintain a pricing umbrella versus traditional retailers and offer the best values to the customer … We will not be a leader in raising prices,” Hartshorn said.
Herrman echoed the above sentiment in his remarks on the incoming tariffs.
“While we won’t speculate on exactly what will happen with certain items or certain categories if it does happen, we are set up to ensure that we maintain our value gap between us and the out the door at no matter what those categories are that could get hit with tariffs. Everything is relative,” Herrman said.
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