Podcast host Josh Holmes weighs in after President Donald Trump took to social media to explain his plan to implement tariffs and discusses Elon Musk’s remarks during the first Cabinet meeting.
Chipotle CEO Scott Boatwright said that the company will absorb President Donald Trump’s planned tariffs on neighboring nations until they cause a substantial challenge.
“It is our intent as we sit here today to absorb those costs,” Boatwright said in an interview with “NBC Nightly News.” However, if costs become a “significant headwind,” that could change, Boatwright said.
The chief executive said during an earnings call earlier this month that the company sources 2% of its ingredients from Mexico, which includes avocados, tomatoes, limes and peppers, and less than 0.5% of its ingredients from Canada and China.
MEXICO, CANADA TARIFFS WILL BE IMPLEMENTED DUE TO ‘UNACCEPTABLE’ DRUG FLOW, TRUMP SAYS
If tariffs go into effect, “it would have an ongoing impact of about 60 basis points on our cost of sales,” Boatwright told analysts during the call.
Trump signaled that the U.S. is moving forward with plans to impose a 25% tariff on imports from Mexico and Canada with an additional 10% levy on Chinese imports on Tuesday. The U.S. already implemented a 10% tariff on Chinese imports earlier this year.
Trump initially suspended the levy on Mexican and Canadian imports in January for one month after Canada promised to implement a $1.3-billion border plan and appoint a fentanyl czar, while Mexican President Claudia Sheinbaum agreed to supply 10,000 troops on the border separating the U.S. and Mexico.
A person works in a Chipotle restaurant in New York City. (REUTERS/Andrew Kelly / Reuters)
WHAT ARE TARIFFS, HOW DO THEY WORK AND WHO PAYS FOR THEM?
Trump has already increased tariffs on goods imported from China by 10% across-the-board. Those tariffs took effect on Feb. 4, and the Chinese government announced retaliatory tariffs on certain U.S. energy exports and took other punitive measures, including an antitrust probe of Google and restrictions on exports of rare earth minerals.
A person holding a Chipotle bag exits a restaurant in San Francisco on Monday, April 19, 2021. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
Shortly after Trump’s re-election, the White House said that he is working “to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country.”
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Opponents argue that the cost of the tariffs would just be passed on to American consumers. Over the past several months, several retailers have raised concerns about the prospect of tariffs pumping up the costs of their products or even forcing them to cut back on inventory.
