Target, Best Buy Warn Shoppers: Trump Tariffs Will Raise Retail Prices

Target and Best Buy have warned customers that prices will rise as a result of President Donald Trump’s expanding trade war, Jessica Guynn reported for USA Today.

Best Buy also warned of higher prices on electronics and appliances, as the retailer sources 60% of its products from China, with Mexico being its second-largest supplier. I Photo: Mike Mozart Flickr

New tariffs include a 25% duty on imports from Mexico and Canada, which took effect Tuesday, while import levies on Chinese goods have doubled to 20%.

Target CEO Brian Cornell cautioned that Trump’s tariffs on Mexican imports could cause immediate price hikes for seasonal produce such as strawberries, avocados, and bananas.

"Those are categories where we’ll try to protect pricing, but consumers will likely see price increases over the next few days," Cornell said in a CNBC interview after Target posted its fourth-quarter earnings.

Target relies heavily on Mexican produce during the winter months.

Best Buy also warned of higher prices on electronics and appliances, as the retailer sources 60% of its products from China, with Mexico being its second-largest supplier.

"We’ve never seen this kind of breadth of tariffs. This impacts the entire industry," Best Buy CEO Corie Barry said."Vendors will pass along the tariff costs to retailers, making price increases for U.S. consumers highly likely."

Following Barry’s remarks, Best Buy shares dropped 13%. For months, business lobbying groups have cautioned that consumers will ultimately bear the cost of tariffs as companies pass the additional import duties onto buyers.

A Morgan Stanley survey of 2,000 U.S. consumers revealed declining economic sentiment in February:

• Only 38% of respondents expect the economy to improve in the next six months, down from 44% last month.

• 48% believe the economy will worsen.