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.
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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.
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.”
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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.
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