With President Donald Trump imposing 25% tariffs on goods coming in from Mexico and Canada and expanding tariffs on Chinese goods, the CEO of Target suggested that prices for many items will go up in the coming days.
In an interview with CNBC on Tuesday, CEO Brian Cornell said customers should expect fruits and vegetables to cost more within days. Cornell told CNBC that Target heavily relies on produce from Mexico during the winter.
"We'll try to protect pricing, but the consumer will likely see price increases over the next couple of days," he told CNBC, adding that avocados, bananas, and strawberries are among the products expected to have nearly immediate price increases.
Cornell said that the retailer has been aware that tariffs would be a possibility for some time and has been trying to prepare for their potential impacts.
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"We've diversified our supply chain to give us more optionality, and I think that'll serve us well as we go forward. But we always want to make sure we're delivering great value to the consumer," he said.
One example is that Target has gone from getting 60% of its imports from China to about 30%, he said.
As President Trump considered potential tariffs, Target said it noticed in February softer consumer spending on discretionary items.
"I think we've seen a cautious consumer for quite some time now. You know they're shopping carefully, and they're making sure they're stretching their budgets as carefully as they can," he said.
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Best Buy CEO Corey Berry also addressed tariffs, saying that price increases are likely.
"While Best Buy only directly imports 2% to 3% of our overall assortment, we expect our vendors across our entire assortment to pass along some level of tariff costs to retailers, making price increases for American consumers highly likely," Berry told investors on Tuesday.
Unlike produce, which has a short shelf life, electronics typically take weeks or months to be sold. Berry said that prices at Best Buy likely won't go up immediately, but eventually, tariffs will be absorbed by consumers.
"Tariffs at this level will result in price increases. I think it is very difficult to say, given the backdrop that we’re in, exactly how big that is," he said.
