Target has received almost $1bn (£733.9m) in tariff refunds from the US government, boosting its latest profits, according to BBC News. The American retail chain reported a $994 million pre-tax reimbursement in the second quarter, which doubled operating income to $2.6bn from $1.3bn a year earlier.
Tariff refunds after Supreme Court ruling
The payment came after a Supreme Court ruling declared a wave of President Donald Trump's import tariffs unlawful, the BBC reported. Target is the latest of many businesses, both large and small, given tax rebates on goods imported to the US. Earlier this month, a court filing by customs officials revealed the Trump administration had paid back $100bn (£78bn) in "Liberation Day" tariff refunds to businesses, according to the BBC. That represented about 60% of all tariff revenue collected by the government under the policy, with significant amounts still to be repaid.
| Refund metric | Amount / share |
|---|---|
| Target pre-tax refund | $994m |
| Target Q2 operating income (prior year) | $1.3bn |
| Target Q2 operating income (latest quarter) | $2.6bn |
| Total "Liberation Day" refunds paid back | $100bn (£78bn) |
| Share of tariff revenue collected | ~60% |
New tariffs still looming
Trump has continued to impose duties on goods entering the US through different legal means, meaning many companies still face extra taxes, according to the BBC. On Monday, the president announced he would delay the introduction of a raft of new import taxes on various Canadian goods for three days as negotiations over a trade deal continue. Trump has also threatened to impose a 50% levy on nearly $20bn (C$28bn) worth of imports from Canada, the BBC reported. The two sides remain at an impasse on several issues, including US tariffs on autos and many Canadian provinces banning American liquor sales.
The president has used and threatened tariffs on dozens of countries since returning to the White House last year, according to the BBC. He has argued the trade policy will boost American manufacturing and jobs as businesses either source goods domestically or shift operations to the US. Economists have warned that prices can rise for consumers as businesses, which pay the tax when importing goods, pass the extra cost on to customers.
How Target plans to use the money
When asked how Target would use the tariff refunds, chief financial officer Jim Lee did not provide details but added: "We have and will continue to invest in price." Last year the company slashed its expectations, which it blamed on a "high challenging environment" amid the introduction of tariffs at the time, the BBC reported.
The retailer also said it would aim to reduce its reliance on China for sourcing products. Target's big sellers are mostly in non-essential goods, such as home furniture and beauty products. It sources the majority of such products from China, with 30% of its store-label goods from the country, down from 60% in 2017.
Turnaround plan and price cuts
Target is in the middle of a turnaround plan, with the retailer saying it had cut prices on more than 10,000 items over the past year, according to the BBC. Chief executive Michael Fiddelke said: "While there's still meaningful work ahead, we're encouraged by the progress we're making and remain focused on executing with discipline."
The refunds provide a significant cash boost as the retailer continues its turnaround efforts, though ongoing tariffs on imports via other legal routes mean duty costs are unlikely to disappear entirely.
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