Expect to pay more—Target and Best Buy confirm price hikes

Target and Best Buy executives have announced that prices may increase in their stores soon due to tariffs imposed by the Trump administration on imports from Mexico, Canada, and China. Target CEO Brian Cornell stated during an interview with CNBC that consumers will “likely see prices increase over the next couple of days.” Best Buy CEO Corie Barry indicated that price hikes are “highly likely” as well.

Cornell noted that although half of Target’s goods are sourced from the United States, the company significantly relies on Mexico for fruits and vegetables during winter. He specifically mentioned that consumers could expect higher prices for items like strawberries, bananas, and avocados. He added, “Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days.”

Barry confirmed that China and Mexico are the top suppliers for Best Buy, stating, “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.”

On the same day, Trump enacted a 25% tariff on products imported from Canada and Mexico, while tax on Chinese imports rose to 20%. These actions followed a series of tariffs affecting hundreds of billions in Chinese goods. In response, China and Canada have imposed retaliatory tariffs, with Mexico considering its countermeasures.

The Trump administration articulated that the tariffs aim to address issues related to the flow of fentanyl into the U.S. However, these tariffs threaten to increase prices on a range of goods imported from the affected countries, which account for over 40% of U.S. imports by value.

Target indicated that “tariff uncertainty” could adversely affect its profit margins in the current quarter. Additionally, the company recently reported a 1% growth projection for sales this year, attributing a decline in February sales to cold weather and weakening consumer confidence.

S&P 500 down 2%, $3.3 trillion lost on stock market and Trump’s still pushing tariffs

Target has also faced backlash from consumers regarding its recent changes to diversity, equity, and inclusion (DEI) initiatives. After the Trump administration took office, Target eliminated certain hiring goals for minority employees and ended its executive committee on racial justice, prompting calls for boycotts, particularly from progressive customers. Rev. Jamal Bryant has organized a 40-day boycott, urging participants to support Black-owned businesses.

Data from Placer.ai reveals that customer visits to Target, Walmart, and Costco have decreased over the past month, with the most significant drop at Target, showing a 7.9% decline in foot traffic. In contrast, Costco’s traffic grew by 4.8% during the same period.

On an earnings call, Barry emphasized the global and complex nature of Best Buy’s supply chain, citing that 55% of its products come from China and 20% from Mexico. She expressed concern regarding potential effects on consumer behavior due to price increases tied to tariffs, stating it is uncertain how consumers will react to rising prices amid general economic conditions.

Following these developments, Best Buy shares fell more than 13% on Tuesday morning. The company’s fiscal 2025 fourth-quarter net income declined sharply to $117 million from $460 million the year before, while comparable sales grew only 0.5% year-over-year, falling short of Wall Street projections.

Best Buy forecasts its fiscal 2026 revenue between $41.4 billion and $42.2 billion, excluding potential tariff impacts. Barry noted that the company is implementing a new third-party marketplace, expected to launch mid-year, as part of its growth strategy.

Amid sluggish home sales, Best Buy’s appliances sector is also facing challenges, with a year-over-year sales drop of 11.4% in the U.S. In contrast, international appliance sales rose by 4.9% during the same period.

Featured image credit: Karsten Winegeart/Unsplash