Impact of Trump’s Tariffs on Big Box Stores

The effects of Donald Trump’s tariffs on imports from Mexico, Canada, and China are expected to be felt soon. Major retailers such as Target, Best Buy, and Walmart are warning customers to prepare for price increases, which could begin as early as this week.

In a recent interview with CNBC, Target CEO Brian Cornell stated, “The consumer will likely see price increases over the next couple of days” due to the 25% tax on goods imported from across the Northern or Southern border. Target primarily sources its produce from Mexico during winter months, and Cornell cautioned that prices of items like strawberries, avocados, and bananas will likely reflect the added import cost in the coming days.

Best Buy CEO Corie Barry offered a similar forecast during the company’s earnings call on Tuesday. Barry acknowledged that the company relies heavily on China and Mexico in its supply chain, which means it will face higher import costs. As a result, consumers can expect price increases. “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 told investors.

Walmart, which has seen an increase in customers seeking affordable goods to mitigate the effects of inflation, has also warned that it cannot maintain low prices indefinitely once the tariffs take effect. In an interview with CNBC last month, Walmart’s Chief Financial Officer John David Rainey stated that the company is “not going to be completely immune” to tariffs.

A common thread runs through the statements of these executives, beyond their warnings of impending price increases. None of them mention shifting their supply chains back to the United States. Instead, they discuss adjusting prices to protect certain items. For example, Target’s Chief Commercial Officer Rick Gomez suggested that the company may absorb the increased cost of producing t-shirts, which could lead to price shifts in other products.

Response to Tariffs

A survey of supply chain executives conducted by Economist Impact found that 40% of companies plan to increase sourcing within the US in response to Trump’s tariffs. However, nearly as many businesses are preparing to cut internal costs and increase lobbying efforts. Only 21% of companies stated that they would invest in expanding domestic manufacturing capabilities, the least popular option. This is consistent with research on the impact of tariffs, which has shown that they can have a detrimental effect on reshoring manufacturing jobs.

Donald Trump believes that his tariffs will boost American manufacturing jobs. However, it is more likely that consumers will notice the price increases on everyday goods before seeing new factories being built in their towns. The construction, staffing, and production of new factories can take years, making it a lengthy process.