Target and Best Buy warn of price increases from Trump's tariffs

Target and Best Buy, two of America's top retailers, warned on Tuesday that prices will rise as a result of President Donald Trump's tariffs on imported products from Mexico, Canada, and China.

Target's CEO indicated Tuesday that the business may raise prices on fruits and vegetables in the coming days in reaction to tariffs, while Best Buy's CEO said price rises were "highly likely."

Trump's 25% tariffs on Mexico and Canada took effect on Tuesday. Trump also raised the tax rate on all Chinese goods to 20% from 10%. These import charges add to current duties on hundreds of billions of Chinese goods. China and Canada promptly countered with duties on American imports, and Mexico is about to unveil its own.

The Trump administration said that the tariffs were required to prevent the supply of fentanyl entering the United States. However, the duties threaten to hike the prices Americans pay for a wide range of products imported from the three countries, which together import more than 40% of all US goods in value.

Cornell stated that Target relies significantly on Mexican produce shipments 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 stated that "tariff uncertainty" will affect its profit this quarter.

Best Buy also expects tariffs to raise pricing. China and Mexico are Best Buy's main sources for consumer electronics.

“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 business anticipates its vendors to pass on some tariff costs to retailers, "making price increases for American consumers highly likely."

“Now that these tariffs are coming into play, the cost of many of these products are going to go up quite substantially,” said Neil Saunders, managing director at GlobalData, a retail consultancy. "There's no way that retailers can afford to absorb all of this cost increase themselves and keep prices the same for the customer."

Saunders believes shoppers would notice an immediate impact on perishable products, as Target has warned. Potential increases in categories such as electronics may be delayed since some shops have a buffer of domestic inventory that have previously passed through ports. However, if the tariffs remain in place, retailers of home furnishings, clothes, and other things manufactured entirely or partially in the targeted nations would gradually pass on the higher prices, he added.

“No retailer is coming out and saying, ‘Yeah, 2025 is going to be a fantastic year for us,’” he said. “There’s a lot of nervousness out there, and it does look as though this year might be a very middling year in terms of growth, and maybe a poor year in terms of profit.”