New York
CNN
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Two of America’s largest retailers, Target and Best Buy, warned Tuesday that prices will increase following President Donald Trump’s tariffs on imported goods from Mexico, Canada and China.
Trump’s blanket 25% tariffs on Mexico and Canada took effect on Tuesday. Trump also doubled the tariff on all Chinese imports to 20% from 10%. Those import taxes sit atop existing tariffs on hundreds of billions in Chinese goods. China and Canada immediately retaliated with tariffs on American goods, and Mexico is planning to announce retaliatory measures.
The Trump administration said the tariffs were necessary to stem the flow of fentanyl into the United States. But the tariffs threaten to raise the prices Americans pay for a wide array of goods that are imported from the three nations, which collectively import more than 40% of all US goods by value.
Target CEO Brian Cornell said in an interview with CNBC Tuesday that Trump’s tariffs on Mexico may force the company to raise prices on fruits and vegetables as soon as this week.
Cornell said Target relies heavily on Mexican produce imports during the winter. “Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he said.
Target also said that “tariff uncertainty” will impact its profit this quarter.
Best Buy also expects tariffs to cause prices to rise. China and Mexico are the top sources for consumer electronics at Best Buy.
“We’ve never seen this kind of breadth of tariffs. This, of course, impacts the whole industry,” Best Buy CEO Corie Barry said on a call with analysts Tuesday. The company expects its vendors to pass along some tariff costs to retailers “making price increases for American consumers highly likely.”
Target said its sales declined in February and it expects sales to only grow around 1% this year.
Last month, sales were “soft” as cold weather impacted clothing spending. But “declining consumer confidence impacted our discretionary assortment overall,” Jim Lee, Target’s chief financial officer, said in a statement.
Target is also under pressure from consumers frustrated by its shift away from diversity, equity and inclusion (DEI) efforts.
Days into the Trump presidency, Target announced it was eliminating hiring goals for minority employees, ending an executive committee focused on racial justice and making other changes to its diversity initiatives. Target said it remained committed to “creating a sense of belonging for our team, guests and communities” and also stressed the need for “staying in step with the evolving external landscape.”
Target’s retreat sparked anger from progressive customers and boycott calls, particularly from Black consumers.
Rev. Jamal Bryant of New Birth Missionary Baptist Church in Stonecrest, Georgia, has called for 100,000 people to begin a 40-day boycott of Target on Wednesday to coincide with the start of Lent. Participants are encouraged to purchase products from Black-owned businesses during this period.
There are signs that the blowback from Target’s move is impacting the company.
Customer visits to Target, Walmart and Costco have slowed over the last four weeks, but they have dropped the most at Target, according to Placer.ai., which uses phone location data to track visits. The slowdown could also be attributed to weather, economic conditions and other variables, Placer.ai cautioned.
During the week of February 17, the latest week available, foot traffic to Target dropped 7.9% and 5.2% to Walmart. Foot traffic to Costco, which has stood by its DEI policies, increased 4.8%.
The data “shows a clear drop in traffic in late January into mid-February following the company’s step back from DEI,” Joseph Feldman, an analyst at Telsey Advisory Group, said in a note to clients last week.
This story has been updated with additional context and developments.
