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The stock market's steep fall this week claimed a lot of victims, among which were some onetime heavy investor favorites. One of these was veteran retailer Target (NYSE: TGT) which, according to data compiled by S&P Global Market Intelligence, lost nearly 8% of its value across the period. Investors and analysts alike were concerned about the company's exposure to a big trading partner.
High China exposure
That trading partner is China, a nation that's front and center on the Trump administration's long list of tariffs that went into effect during the week. Several analysts cautioned that companies with significant China business could end up really taking it on the chin, mirroring investor fears.
One pundit who put this concern into words was Bernstein's Zhihan Ma. On Friday, she published a broad take on the impact of the tariffs on the retail sector. In the analysis, she flagged Target and discount retailer Dollar Tree as being the two most exposed within her company's coverage of the sector.
According to her calculations, both companies have roughly 50% direct and indirect exposure to Chinese manufacturing. With the high (34%) tariff imposed by the administration, costs for the two are set to rise significantly.
Others are better positioned
Since this was a comparative analysis, Ma also identified the retailers she felt were relatively insulated from the new levies. In her view, these are Walmart, Costco, and Dollar General. To her, Walmart and Costco not only have relatively limited exposure to tariff-slammed exporters but also the bargaining power to negotiate lower prices from suppliers.
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