Trump’s Tariff Impact: Retailers Warn of Rising Goods Prices

With President Donald Trump's comprehensive tariffs on imported goods from China, Mexico, and Canada now in effect, retailers are bracing for significant disruptions. The new tariffs include a 10% increase on Chinese goods and a 25% increase on products from Mexico and Canada, forcing retailers to reassess their supply chains and pricing strategies.

Many large retailers have warned about the potential impact on their businesses and consumers. Target's CEO Brian Cornell cautioned that agricultural prices could rise within days due to the tariffs on Mexico, as the company heavily relies on imported fruits and vegetables from there in the winter. Best Buy's CEO Corie Barry noted that since 75% of the company’s products come from China and Mexico, American consumers are "very likely" to see price increases. Barry pointed out that although Best Buy directly imports only 2%-3% of its products, the company expects suppliers to pass on tariff costs to consumers.

Walmart, the largest retailer in the U.S., has yet to factor in the tariffs in its full-year guidance but acknowledges the uncertainty they bring. CFO John David Rainey mentioned that Walmart may have to raise prices in certain instances.
The tariffs are expected to squeeze profit margins for many retailers, potentially forcing them to choose between absorbing higher costs, passing the costs onto consumers, or a combination of both. The National Retail Federation warned that as long as the tariffs remain in place, "Americans will be forced to pay higher prices for household goods."

However, some retailers see potential benefits from the trade disruptions. Discount chains like TJ Maxx, which purchase excess inventory from other retailers, may profit from increased stock as businesses rush to import goods before the tariff deadlines. Scott Goldenberg, CFO of TJX Cos., stated that the tariffs could create "a favorable buying environment" for the company.

E-commerce marketplace Etsy also considers itself a potential beneficiary. CEO Josh Silverman noted that the company's reliance on Chinese products is lower than that of its competitors. Meanwhile, resale platforms like ThredUp expect that if retail prices rise, price-sensitive consumers may turn to second-hand products.

The impact of the tariffs is also beginning to show in freight data.

As the first business day of March approaches, North America’s tariff measures are fully underway, with shippers increasingly transporting goods from Canada to the U.S. to avoid tariffs set to take effect on Tuesday. This has led to a spike in outbound freight tender volumes from Canada, including a significant portion of cross-border freight, as well as a sharp increase in tenders that carriers have rejected due to capacity constraints or the inability to ship more profitable goods on the spot market.

Specifically, carriers rejected 4.8% and 6.6% of Canadian outbound tenders in January and February, respectively, while in the past seven days, they rejected 10.5% of Canadian outbound tenders.

The tariffs are also affecting the retail landscape in Canada, with several provinces beginning to remove American alcohol from shelves in retaliation. Ontario, Quebec, and British Columbia have announced that they will cease importing and selling American beer, wine, and spirits through government-operated liquor stores.

For American farmers and agricultural businesses, the tariffs present additional challenges. Fertilizer companies like Compass Minerals have stated that after tariffs on Canadian products are imposed, they will need to pass on costs to customers. This could have long-term effects on farmers’ input costs and profitability while also hitting retail customers in their pockets.