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The executives of the two largest dollar store chains in the United States warned that consumers must prepare for possible price increases due the ongoing and escalating trade war between Washington and Beijing.

Earlier this month, President Donald Trump announced that his administration imposed 25 percent tariffs on additional $200 billion worth of Chinese products. In retaliation, China imposed 5 percent to 25 percent tariffs on another $60 billion worth of U.S. goods including beans, beef, corn, honey, flour, lentils, peas, soybean and other agricultural products.

Dollar store executives say they are working on minimizing the impact of tariffs

On Thursday, Dollar General Chief Financial Officer John Garratt and Dollar Tree President and CEO Gary Philbin stated that the trade war will likely affect their business operations.  Both executives said they are working with vendors to “mitigate the impact” of tariffs.

During the earnings call with analysts, Garratt said, “I want to touch upon our fiscal 2019 financial guidance. As most of you know, tariff rates recently increased from 10% to 25% on certain goods from China. As we have discussed with you on previous calls, we have been executing on a variety of efforts to mitigate the impact of tariffs on our customers and our business.”

Garratt explained that they are focusing their efforts on four areas: continual negotiations with our vendors, product substitution, product reengineering and country of origin and diversification.

“We will do everything we can to minimize the impact of tariffs on our customers, but even with these efforts, we believe our shoppers will be facing higher prices as 2019 progresses,” said Garratt.

On the other hand, Philbin said, “Our merchandising teams have done a terrific job of mitigating the effects of 25% tariffs imposed under Section 301 for Chinese goods included on Lists 1, 2, and 3.”

In addition, Philbin said they uncertain as to when the United States will implement the 25% tariff to the list 4.  He is anticipating that it will have a significant impact on Dollar Tree’s business.

According to him, “If tariffs on List 4 products are implemented, we expect that it will be impactful to our business and especially to consumers in general.”