Target, Best Buy Forecast Price Hikes Due to New Tariffs

New York, NY — Two major retailers, Target and Best Buy, announced on March 4, 2025, that prices will rise as a result of President Donald Trump’s newly implemented tariffs on imported goods from Mexico, Canada, and China. Target’s CEO cautioned that these increases could occur sooner than expected.

Effective March 4, Trump enacted a 25% tariff on imports from Mexico and Canada and increased the tariff on all Chinese goods from 10% to 20%. This new round of tariffs adds to existing taxes on hundreds of billions worth of Chinese goods, prompting immediate retaliatory measures from China and Canada, with Mexico considering similar actions.

The Trump administration stated the tariffs aim to curb the influx of fentanyl into the U.S., but they also present a risk of price hikes for American consumers since these three countries account for over 40% of all U.S. imports by value.

During an interview with CNBC, Target CEO Brian Cornell indicated that the tariffs on Mexico might force the company to increase prices on certain produce items, potentially starting this week. “Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he said.

Additionally, Target’s profit is expected to be affected due to ongoing “tariff uncertainty,” which complicates pricing strategies. February sales were reported as lower than anticipated, with only a projected 1% growth for the year. Target’s CFO, Jim Lee, noted that harsh winter weather had impacted clothing purchases, while declining consumer confidence affected discretionary spending.

In another development, Best Buy anticipates that tariffs will similarly drive up prices, as China and Mexico are key suppliers of consumer electronics. Best Buy CEO Corie Barry stated during a conference call, “We’ve never seen this kind of breadth of tariffs. This… impacts the whole industry.” The company expects vendors to pass along some of the tariff costs to retailers, making price increases for consumers highly probable.

Moreover, Target faces additional challenges stemming from customer backlash regarding its shifts away from diversity, equity, and inclusion (DEI) initiatives. Recently, the company announced the elimination of hiring goals for minority employees and the disbandment of an executive committee focused on racial justice.

Rev. Jamal Bryant from New Birth Missionary Baptist Church in Georgia has called for a boycott of Target, urging participants to support Black-owned businesses for a 40-day period during Lent, starting March 5.

Analysis from Placer.ai indicated a marked decrease in customer visits to Target over recent weeks, with foot traffic declining by 7.9% during the week of February 17. In contrast, Costco, which has maintained its DEI policies, experienced a 4.8% increase in visits over the same period.

Joseph Feldman, an analyst at Telsey Advisory Group, noted the clear drop in foot traffic appeared to correlate with Target’s decision to step back from its DEI commitments. “The data shows a clear drop in traffic in late January into mid-February following the company’s step back from DEI,” he stated.

The ongoing developments regarding tariffs and consumer sentiment are critical as both companies adapt to a rapidly changing economic landscape influenced by trade policies and social dynamics.