- Target CEO Brian Cornell is the latest executive to warn how President Donald Trump’s tariffs implemented on Tuesday will impact consumers. While Walmart and Costco brass said the brunt of tariffs will be passed down to shoppers, Chipotle CEO Scott Boatwright said the burrito chain will hold off on raising prices for as long as possible.
Target CEO Brian Cornell has joined a long list of retail bosses warning consumers will be forced to pay higher prices on the tail of President Donald Trump’s steep tariffs on Mexico, Canada, and China.
Trump’s tariffs, which include a 25% tax on goods from Canada and Mexico as well as a 10% levy on Chinese imports, took effect on Tuesday. The move was an unwelcome one for economists and investors; the S&P 500 sank nearly 2% following Trump’s announcement.
The levies have also placed retailers at a crossroads: pass on increased cost of goods to consumers or take it on the chin. Many big-box retailers, including Target, have made the decision to raise prices in response to the tariffs. Target sources much of its winter produce from Mexico and will raise prices on fruits and vegetables like strawberries, avocados, and bananas, Cornell said on Tuesday following Target’s fourth-quarter earnings.
“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 told CNBC. “If there’s a 25% tariff, those prices will go up.”
Target posted better-than-expected results in its fourth-quarter earnings on Tuesday, reporting a 1.5% increase in quarterly comparables sales. But the retailer warned sales would increase little and profits could take a hit as a result of economic uncertainty and the impact of tariffs.
Walmart similarly said this year would not see a repeat of last year’s blockbuster earnings, but did not officially factor tariffs into the company’s guidance. Chief financial officer John David Rainey told CNBC last month Walmart would “shift supply where necessary to try to take advantage of lower costs that we can then pass on to consumers.”
In November last year, Rainey warned, “there probably will be cases where prices will go up for consumers” if Trump’s tariffs went into effect. During their respective earnings reports late last year, Costco CFO Gary Millerchip warned of possible price increases, as did Dollar Tree CEO Michael Creedon and Lowe’s CFO Brandon Sink.
Best Buy also topped earnings expectations Tuesday but offered a more sobering picture of the year ahead. CEO Corie Barry said the tech retailer counts China and Mexico as some of the biggest sources on its supply chain.
“Trade is critically important to our business and industry. The consumer electronic supply chain is highly global, technical and complex,” Barry said. “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.”
Consumer brands have likewise tried to brace investors and consumers for the impact of tariffs. After Trump announced a 25% duty on steel aluminum, Coca-Cola CEO James Quincey said the increase in aluminum costs could drive up costs of its namesake drink, though he said the taxes would not radically impact the beverage giant’s business.
Many retailers for their part—including those planning to raise prices—have been working for months, even years, to implement strategies to minimize the impact of potential tariffs. They have had experience weathering the tariffs of Trump’s first term and have since diversified supply chains to avoid the taxes toppling business.
“We’ve lived in a tariff environment for the last seven or eight years, and we’ll do what we know how to do,” Rainey told CNBC last month.
Who isn’t raising prices?
Not everyone has decided to raise prices to combat the impact of tariffs. Chipotle CEO Scott Boatwright said on Sunday the burrito-bowl purveyor will hold prices steady for as long as possible, despite about half of its avocado supply being impacted by taxes on Mexican imports.
“We don’t think it’s fair to the consumer to pass those costs off to the consumer, because pricing becomes permanent. And so again, back to the idea of delivering extraordinary value to the consumer. We’re going to stay the course,” Boatwright told NBC Nightly News.
Chipotle has worked to diversify its avocado supply for years, shifting away from Mexico to also get its key guacamole ingredient from Colombia, Peru, and the Dominican Republic, Boatwright said during Chipotle’s February earnings call.
Boatwright was not able to say for certain how long Chipotle would be able to keep prices steady in the wake of Trump’s tariffs.
To be sure, more companies could follow Chipotle’s lead. PwC consumer markets industry expert Ali Furman said that retailers won’t be able to be as aggressive in raising prices as they were in 2018 after Trump’s first wave of tariffs. She told Yahoo Finance consumers are going to be less likely to pay more for products after seeing the impact of inflation of prices, which hiked costs 30% in the past five years. The Conference Board reported last month the largest drop in consumer confidence since 2021.
“Passing tariff impacts onto the consumer is not going to be a primary strategy that retailers employ,” Furman said.
