Changes in the import and export policies, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments, could require us to change the way we conduct business, affect our merchandise margins, and adversely affect our financial condition, results of operations, reputation, and our relationships with customers, vendors, and Associates in the short- or long-term. Similarly, changes in laws and policies governing foreign trade, manufacturing, development, and investment in the countries where we currently operate could adversely affect our business.
The U.S. government recently announced tariffs on product imports from certain countries, including Canada, Mexico, and China. These actions have resulted, and are expected to further result, in retaliatory measures on U.S. goods. If maintained, these recently announced tariffs and the potential escalation of trade disputes could pose a risk to our business that could affect our revenue and cost of sourcing our merchandise. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of merchandise, and our buying organization’s ability to execute our merchandise sourcing model to offset the effects of the tariffs. Further, actions we take to adapt to new tariffs or trade restrictions may increase risk or may cause us to modify our operations, which could be time-consuming and expensive; impact pricing of our merchandise, which could impact our sales, profitability, and our reputation as a value retailer; or cause us to forgo business opportunities.