Here’s why Target is more exposed than Walmart to the sweeping trade changes that Trump promised

• As America’s grocery king, Walmart sources a high share of its products from the US.
• Target, by contrast, relies more on merchandise that is often imported, such as apparel and housewares.
• The difference puts more of Target’s business at risk of being impacted if Trump follows through on his tariff promises.

For all their similarities, Walmart and Target have key distinctions that could spell big differences in how each would be affected by rising import costs if Donald Trump follows through with his promised tariffs.

“Target is actually much more exposed than Walmart because Walmart is grocery-heavy and groceries are predominantly domestic,” Jason Miller, supply chain professor at Michigan State University, told Business Insider.

As America’s grocery king, Walmart US makes nearly 60% of its revenue from the grocery category and only about a quarter of sales from general merchandise.

In addition, grocery as a share of sales has been increasing in recent years as the general merchandise share has declined, according to Walmart’s annual report.

Target, by contrast, relies much more heavily on merchandise that is often imported, such as apparel, housewares, and beauty. Food and beverage sales accounted for less than a quarter of Target’s sales last year.

TD Cowen retail analyst Oliver Chen told BI that Target’s apparel segment presents another potential complication, as fashion is more sensitive to seasonality. That could make it more difficult to pull orders forward ahead of possible tariffs or line up new suppliers in time to still be in style.

“When you miss apparel timeline, you don’t get it back, and Target has more apparel exposure,” he said.

Beyond its grocery-to-merchandise ratio, Walmart has another key advantage over Target: scale.

“Walmart is much bigger,” Kantar analyst Gina Logan told BI. “And I’m not just talking about sales.

“They have a much more advanced supply chain,” she added. “They have a wider range of suppliers, they have more ability to pivot and predict demand, and can use their automation and forecasting in order to react to this in a much faster, more predictive way than Target.”

This is not the first time the Spark has found a competitive advantage over the Bullseye in the grocery aisle.

When US shoppers began to cut spending back in 2023, prioritizing essentials like groceries in their weekly budgets, sales at Walmart chugged along while Target struggled.

Target has since found success by taking a much more Walmart-like stance with price cuts and bargain brands, and its share of grocery sales has increased by 1-2 percentage points per year over the last three years.

Logan says tariffs, if announced by the Trump administration, would likely push Target harder into the grocery game, especially with its portfolio of private-label food brands.

Target and Walmart both report earnings next week. Walmart declined to comment for this story, citing the quiet period, and Target did not respond to BI’s request.

The last time the companies’ executives discussed tariffs on earnings calls was in 2019, according to data from AlphaSense.

At the time, Walmart said it would not raise prices on food impacted by tariffs and would instead look to offset the cost elsewhere.

“As a guest-focused retailer,” Target CEO Brian Cornell said in May 2019, “we’re concerned about tariffs because they lead to higher prices on everyday products for American families.”

He later said in a November call that then-President Trump’s tariffs were amounting to $50 million to $60 million in added costs per quarter, adding that “obviously we’re all facing the same tariff issues together.”

But as Target’s and Walmart’s financials show, not everyone is likely to be impacted by potential tariff increases to the same degree.