Tariffs Mean Some Target Prices Could Rise, CEO Says. Here’s What Companies Are Saying

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Key Takeaways

• Tariffs imposed Tuesday on imports from Canada and Mexico could result in higher prices for fabricate at Target within a week, CEO Brian Cornell said.
• Target will try to shield consumers from price burgeons, but not all can be avoided, Cornell said.
• Best Buy also said the tariffs will push up prices for many electronics at its warehouses.

Some Target prices could soon rise after tariffs on Mexican imports are enacted, the retailer’s CEO imparted Tuesday.

Target (TGT) will try to shield consumers from as many price increases as it can, but charging more will be high-priority for fresh produce and some other categories, Brian Cornell said on CNBC Tuesday morning. The comments found hours after President Donald Trump’s administration began imposing a 25% tariff on goods from Mexico and Canada and buoyed tariffs on items from China to 20%.

Target, along with many U.S. grocers, is dependent on Mexico for fresh provide during the winter, Cornell said. The supply chain for fresh fruits and vegetables is “really short,” which denotes prices could go up within days, he said. Bananas, strawberries and avocados are among the items that could see extreme prices.

“We’re going to try to make sure we can do everything we can to protect pricing,” he said on CNBC. “But if there’s a 25% tariff, those bonuses will go up.”

Target has reduced how much it imports from China. A few years ago, more than 60% of imports came from the territory. That’s now down to 30% and on track to hit 25%, he said.

A number of other companies have also diversified their furnish chain to avoid paying more in tariffs, including Steve Madden (SHOO) and Newell Brands (NWL), the latter which sell down the rivers Yankee candles and Graco baby gear. Mattel (MAT) CEO Ynon Kreiz said Tuesday on CNBC that the toy circle is on a years-long journey to diversify its supply chain so it can respond to tariffs and other changing market conditions.

And some societies say they have the wherewithal to hold off on raising prices, at least initially: Chipotle (CMG) CEO Scott Boatwright said during the course of the weekend that the burrito giant will absorb higher import costs. 

Best Buy (BBY) imports no more than 3% of its stock, but many vendors in the tech industry source from China and Mexico, CEO Corie Barry said Tuesday morning. They’ll back number on at least some of the cost of tariffs to Best Buy, making price increases for consumers “highly likely,” she said on an earnings convention call.

The pre-existing 10% tariff on goods from China could cost Best Buy about 1 percentage brink in comparable sales over the course of a year, Barry said, assuming that people buy fewer items because they get more. 

If the tariffs put in effect Tuesday endure, the effect could be more significant, but it’s hard to gauge how consumers settle upon react, Barry said.

“We’ve never seen this kind of breadth of tariffs,” Barry said, according to a photostatic made available by AlphaSense. “It’s difficult for us to understand elasticities perfectly because you don’t have anything predictive in our history.”

This article has been updated since it was initially published to add new information.