Target Corp. and Best Buy Co. warned consumers to expect higher prices as a direct result of the tariffs U.S. President Donald Trump imposed on Mexico, Canada and China overnight. 

Target Chief Executive Brian Cornell said its shoppers would likely see price hikes in its stores “over the next couple of days,” in a CNBC interview on March 4, just hours after the tariffs went into effect.

Among the first comments on tariff impact from a major U.S. retailer, Cornell said the company has done a lot of scenario planning on goods like fruits and vegetables, a “significant amount of which” comes from Mexico during the winter, he said.

“We’re going to try to make sure we can do everything we can to protect pricing. But if there’s a 25% tariff, those prices will go up,” he said.

Shares in Target, which said it’s now projecting little to no sales growth this year, were down 4% in premarket trading following its earnings release. The stock has fallen about 20% over the past 12 months, compared to a 14% advance for the S&P 500 Index.

Best Buy also echoed the price warnings on its own earnings call, telling investors that price increases are “highly likely” on the gadgets and appliances it sells, due to tariffs. China and Mexico are the top two sources of products for the company, Best Buy CEO Corie Barry said on March 4. 

Conservative Outlook

Target and Best Buy join companies such as Walmart and Home Depot Inc. in taking a conservative outlook despite posting relatively healthy fourth-quarter results as executives try to decipher the impact of macroeconomic forces on their businesses. 

Retail, auto and other industry lobbying groups have spent the last few months warning about the impact of tariffs on the U.S. economy, but executives have said it’s been hard to game out the impacts until the tariffs were actually in place and the companies began passing along the costs to its customers.

“The American people are counting on President Trump to bring down costs and grow the U.S. economy. Tariffs on Canada and Mexico put those goals in serious jeopardy and risk destabilizing the North American economy,” said Michael Hanson, senior executive vice president of public affairs at the Retail Industry Leaders Association, which represents companies including Home Depot, Best Buy and Target. “Stacking tariffs on household goods will also raise costs on American families, millions of whom have struggled through the worst bout of inflation in forty years.” 

Still, Target’s Cornell said the company was eager to finally have some semblance of “certainty and clarity.” The chain still depends on imports from China, which have already been hit by a rise in existing levies, but the retailer is diversifying its supply chain. About 30% of its imports comes from China compared to 60% a few years ago, and the company is working to get that down to 25%.

Other economic red flags include expectations that U.S. inflation will remain high and the sharpest decline in consumer confidence since 2021. High grocery prices are squeezing lower-income consumers. 

Markdowns and higher fulfillment and supply chain costs for online orders weighed on Target’s profit margins during the latest quarter, though growth in newer areas like advertising and marketplace helped offset that pressure. 

Target said February sales were soft as cold weather affected apparel sales and declining consumer sentiment affected nonessential categories. The company expects these trends to moderate, though it will remain “appropriately cautious” through the year.

The company sees comparable sales being little changed in 2025, below the average analyst estimate, while net sales are expected to climb around 1%. Target also warned of “meaningful” pressure on profit in the coming months.