Target and Best Buy Say Price Hikes Are Coming Tha...

It’s not going to be long before we start feeling the impact of Donald Trump’s tariffs on imports from Mexico, Canada, and China. Big Box stores including Target, Best Buy, and Walmart are already telling shoppers to brace for price increases that could start as soon as this week.

In an interview with CNBC, Target CEO Brian Cornell said, “The consumer will likely see price increases over the next couple of days” as a result of Trump’s 25% tax on good coming across the Northern or Southern border. Target primarily gets its produce from Mexico during winter months, and Cornell warned goods like strawberries, avocados, and bananas would likely start reflecting the adding import cost in the coming days.

The head of Best Buy offered a similar prognosis during the company’s earnings call on Tuesday. Corie Barry, CEO of the electronics store, acknowledged that the company is quite reliant on China and Mexico in its supply chain. That means the company will be dealing with higher import costs, which means consumers are going to see that passed on to them. “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.

Even Walmart, which has been enjoying an increase in shoppers seeking cheaper goods to lessen the impact of inflation, has warned that it won’t be able to keep those prices down forever once the tariffs take effect. In an interview with CNBC last month, Walmart’s Chief Financial Officer John David Rainey warned the company is “not going to be completely immune” to tariffs.

There’s a common throughline in the statements of the execs beyond saying prices are going to go up, and it’s what they aren’t saying. None of them are talking about shifting the supply chain back to the U.S. They talked about shifting around prices to protect certain items—Target’s Chief Commercial Officer Rick Gomez, for instance, said the company may want to keep the price of its t-shirts at $5 even if they technically cost more to produce with tariffs factored in, so it may shift that price burden onto other products.

A survey of supply chain executives conducted by Economist Impact found that 40% of companies are planning to increase sourcing within the US in response to Trump’s tariffs, so there is at least some evidence that a minority of companies are prepared to shift things to these shores. (Whether the supply chain here is prepared for that demand is a whole other question). But nearly as many businesses are preparing to simply cut internal costs (read: lay people off) and increase their lobbying efforts. Just 21% said they would invest in expanding domestic manufacturing capability—the least popular of the options made available. This checks out with research on the impact of tariffs, which has found they can have a detrimental effect on reshoring manufacturing jobs.

If you take Donald Trump at his word, which is always a dubious proposition, he believes that the tariffs he is levying will boost American manufacturing jobs. What do you think people are more likely to notice first, though: new factories–which can take years to construct, staff, and get production up and running—going up in their town or the price bump on the cost of goods they buy daily? Trump seems to be betting on the former. Good luck with that.