US retail giant receives $1bn boost from tariff refunds

Target has revealed it has received almost $1bn (£733.9m) in tariff refunds from the US government which boosted the retailer's latest profits.

The American chain said it received a $994 million pre-tax reimbursement, which resulted in its second quarter operating income doubling to $2.6bn from $1.3bn last year.

Target is the latest of many businesses both large and small being given tax rebates on goods imported to the US following a Supreme Court ruling that declared a wave of President Donald Trump's import tariffs were unlawful.

However, Trump has continued to impose duties on goods coming into the US through different legal means, meaning many companies still face extra taxes.

The president announced on Monday 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 threatened to impose 50% levy on nearly $20bn (C$28bn) worth of imports from Canada. The two sides have been 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 he returned to the White House last year. He has argued the trade policy will boost American manufacturing and jobs as businesses either source goods domestically or shift operations to the US.

But economists have warned prices for consumers can rise as businesses, which pay the tax when importing goods, pass on the extra cost to customers.

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.

It represented about 60% of all tariff revenue collected by the government under the policy, with significant amounts still to be repaid.

When asked how Target would use 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.

It has 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. It was previously higher at 60% in 2017.

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.

"While there's still meaningful work ahead, we're encouraged by the progress we're making and remain focused on executing with discipline," said chief executive Michael Fiddelke.