Target and Best Buy warned on Tuesday that shoppers should expect to see higher prices on certain goods as President Trump’s tariffs on Mexico, Canada and China go into effect and those nations take retaliatory action.
At Target’s annual investor meeting on Tuesday, CEO Brian Cornell told reporters that consumers will see price increases on produce such as avocados as soon as in the coming days. He said those price increases are likely to affect the entire industry.
Cornell said he was not prepared to specify all the Target products that could see price increases.
“I think things are unfolding so quickly,” he said. “We will watch this carefully and understand, are these long-term tariffs? Is this a short-term action? How will this unfold over time? I think all of us are speculating, and I think we’re going to listen and learn and make sure that we can control the things we can control. But we don’t want to overreact right now to one day and one headline.”
Target’s chief commercial officer, Rick Gomez, said on the call that the company cannot yet provide specifics on price increases because they are working out pricing in real time, and they want to be strategic.
Target used to source 60 percent of its store-label products from China, back in 2017, but that has dropped to 30 percent, according to company executives. They said they’re hoping to reduce further it to 25 percent by the end of next year, which would be four years ahead of schedule. Target said it is also looking to source more in the U.S., Guatemala and Honduras.
“It’s not as simple as just flowing through cost,” Gomez said. “We have to think about this from a consumer perspective and make sure that our pricing architecture makes sense and puts us in a place where we have affordable options.”
Best Buy delivered a similar message on its earnings call on Tuesday, stressing the importance of international trade to the electronics industry and saying it is “highly likely” consumers will see price increases.
“Trade is critically important to our business and industry. The consumer electronic supply chain is highly global, technical and complex,” Best Buy CEO Corie Barry said in an earnings call Tuesday, CNBC reported.
“We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely,” Barry added.
On Tuesday, Trump’s 25 percent tariffs on Canada and Mexico went into effect after a 30-day delay expired. Trump also increased tariffs on Chinese products from 10 percent to 20 percent.
Canadian Prime Minster Justin Trudeau said his country will impose its own 25-percent tariffs on U.S. goods, while Mexican President Claudia Sheinbaum said her country would unveil its retaliatory efforts Sunday without progress toward an agreement.
Wall Street deepened a two-day sell-off amid the rising trade war, with the Dow Jones Industrial Average and the S&P 500 both falling more than 1 percent.
“We’ve never seen this kind of breadth of tariffs, and this of course impacts the whole industry. So it’s not just a Best Buy question, it is a broad industry question. And I say that because that makes the estimation of the impact all the harder,” Barry said, according to CNBC.
The Associated Press contributed.
