Target, Best Buy CEOs warn of price increases as tariffs take effect

The chief executives of Target and Best Buy warned on Tuesday that the tariffs against key trading partners will put pressure on profits and could drive up prices for consumers.

Target CEO Brian Cornell told CNBC that shoppers will “likely see price increases over the next couple of days” as a result of tariffs imposed on Mexico, given how reliant the company is on the country’s produce. He said that the retailer might have to raise prices on its imported fruits and vegetables this week. 

The U.S. began imposing a 25% tariff on goods from Canada and Mexico on Tuesday, while also doubling its levy on Chinese imports as Trump looks to curtail drug trafficking and illegal immigration. The move has set off a trade war with the nations, which are firing back with their own levies on U.S. goods.

TRUMP’S TARIFFS WOULD DRIVE UP CONSUMER PRICES: NATIONAL RETAIL FEDERATION

During Target’s fourth-quarter earnings report on Tuesday, Cornell warned that the company “expects to see meaningful year-over-year profit pressure in its first quarter relative to the remainder of the year,” in part because of “tariff uncertainty.” 

Best Buy CEO Corie Barry echoed similar concerns during the company’s earnings call on Tuesday, saying that it is likely consumers will feel the brunt of this given how critical trade is for the industry.

Shoppers outside a Target in Clifton, New Jersey. (Victor J. Blue/Bloomberg via Getty Images / Getty Images)

“China and Mexico remain the No. 1 and No. 2 sources for products we sell, respectively,” Barry said. “While Best Buy only directly imports 2% to 3% of our overall assortment, 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.”

Earlier this year, the administration delayed these tariffs to allow Canada and Mexico time to negotiate trade deals aimed at addressing U.S. border security and halting the flow of drugs like fentanyl.

TRUMP’S PROPOSED TARIFFS COULD DRIVE UP FOOD PRICES, EXPERTS SAY

Although the nations continued to negotiate, Trump reaffirmed his decision to impose the levies last week, stating in a post on Truth Social that “drugs are still pouring into our Country from Mexico and Canada at very high and unacceptable levels.” 

Best Buy CEO Corie Barry said that it is likely consumers will feel the brunt of tariffs given how critical trade is for the industry. (Reuters/Andrew Kelly / Reuters)

“We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” Trump wrote, adding that “China will likewise be charged an additional 10% Tariff on that date.” 

He also teased other tariffs launching April 2, but did not offer details.

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Aside from Target and Best Buy, a number of retailers have raised concerns over the past several months about the prospect of tariffs pumping up the costs of their products – which would be passed onto consumers – or even forcing them to cut back on inventory. 

For instance, Dollar Tree – which has high exposure to China – warned that if tariffs are implemented, the company might have to change product details or sizes and even stop carrying items altogether if they become too expensive. 

A Walmart spokesperson said in a statement to FOX Business that the company remains “concerned that significantly increased tariffs could lead to increased costs for our customers at a time when they are still feeling the remnants of inflation.” 

Goldman Sachs also raised concerns that hiking the levies on products will drive up costs for everyday Americans.  

FOX Business’ Anders Hagstrom contributed to this report.