President-elect Donald Trump’s sweeping tariff proposals have triggered widespread concerns among businesses and economists.
Trump has suggested imposing a 20% tariff on all US imports and steeper duties of up to 60% on goods from China and other key trading partners.
Retailers like Walmart and Lowe’s have already signaled that they may need to raise prices if these tariffs are enacted.
However, TJX—the parent company of TJ Maxx, Marshalls, and HomeGoods—sees an opportunity amid the disruption.
TJX’s unique business model
Unlike most competitors that depend heavily on overseas production, TJX relies on a unique business model that involves acquiring excess inventory from designer brands.
Much of this merchandise is sourced after it has already been imported, meaning tariffs have typically been paid by the original importer.
This “opportunistic buying” strategy allows TJX to sell items at discounts ranging from 20% to 60% below standard retail prices.
CEO Ernie Herrman believes Trump’s tariffs will only enhance the company’s ability to scoop up discounted goods.
“Manufacturers could bring in goods early,” Herrman noted during an earnings call on Wednesday. “That could create even more availability of goods at advantageous prices for us.”
Lessons from 2019 tariffs
TJX’s confidence stems from experience.
When the Trump administration raised tariffs to 25% on $200 billion worth of Chinese goods in 2019, TJX leveraged the ensuing market disruption to secure bargains.
Herrman described that period as a significant “buying opportunity” for the company.
The National Retail Federation forecasts similar dynamics this year, predicting a 13.6% increase in imports this November compared to last year and a 6.1% rise in December.
Retailers are racing to import goods ahead of potential tariff enforcement, creating conditions that TJX can exploit.
Competitors face an uphill battle
The outlook for TJX contrasts sharply with that of its rivals.
Companies like Steve Madden are accelerating plans to relocate production out of China, while Walmart and Lowe’s anticipate unavoidable price hikes.
“Our model is everyday low prices. But there probably will be cases where prices will go up for consumers,” Walmart finance chief John David Rainey told CNBC.
Although TJX acknowledges that some price increases may occur, analysts believe its pricing will remain competitive.
Neil Saunders, a GlobalData Retail analyst told CNN, “Even if prices rise due to tariffs, TJX will still be relatively cheaper than mainstream retailers.”
By capitalizing on supply chain disruptions and leveraging its unique sourcing strategy, TJX aims to reinforce its reputation as a leader in the discount retail space.
As competitors grapple with rising costs, TJX’s ability to adapt positions it well for growth, even in a challenging economic environment.
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