New York — The economic landscape for American retailers has entered a period of intense volatility as newly imposed tariffs on goods imported from Mexico, Canada, and China take effect, forcing companies like Target and Best Buy to brace for immediate price increases. The repercussions of these trade policies, implemented under President Donald Trump’s administration, are expected to ripple through the supply chain, impacting millions of consumers nationwide. Target CEO Brian Cornell has sounded the alarm, warning that customers will begin to see price hikes within days as the cost of imported goods rises.
The sweeping 25% tariff on imports from Mexico and Canada became official policy on Tuesday, adding another layer of financial strain to businesses that rely on these key trade partners. In parallel, tariffs on Chinese goods have been doubled from 10% to 20%, compounding the financial burden on American importers. These measures are in addition to pre-existing tariffs on hundreds of billions of dollars in Chinese goods, further escalating tensions between the U.S. and its major trading allies. Both China and Canada have already retaliated with their own tariffs on American exports, and Mexico is expected to announce its countermeasures imminently.
The Trump administration has justified the tariffs as a necessary measure to curb the influx of fentanyl into the United States, but economists warn that the policy could have far-reaching consequences beyond its intended scope. The price of everyday goods, from groceries to electronics, is poised to rise sharply as importers, wholesalers, and retailers adjust to the new cost structures. Retail giants like Target and Best Buy find themselves at the epicenter of this economic upheaval, forced to make difficult decisions about pricing, supply chain adjustments, and consumer affordability.
In an interview with CNBC, Cornell emphasized the immediate impact these tariffs will have on fresh produce, particularly during the winter months when Target relies heavily on agricultural imports from Mexico. He noted that the company is working to minimize the impact on consumers, but some price increases will be unavoidable. “We will do our best to shield customers from the brunt of these changes, but in certain categories, especially fresh fruits and vegetables, we anticipate price adjustments as early as this week,” he stated.
Beyond the grocery sector, Target is also preparing for a turbulent financial quarter as the uncertainty surrounding tariffs complicates profit forecasting. The company has warned that the unpredictability of the trade landscape will weigh heavily on its bottom line, adding to existing concerns about slowing consumer spending and shifting market conditions.
Best Buy, another major retailer deeply affected by the tariffs, has expressed similar concerns about the impact on consumer electronics. With China and Mexico serving as the top sources of electronics for the company, the cost of sourcing inventory is expected to climb significantly. Best Buy CEO Corie Barry, speaking to analysts on Tuesday, described the situation as unprecedented. “We have never encountered a tariff regime of this magnitude before, and this will affect the entire industry. Our suppliers are already factoring in these increased costs, which will inevitably lead to higher prices for consumers,” Barry explained.
While Target and Best Buy navigate the financial strain of tariffs, Target finds itself in the middle of a separate crisis—consumer backlash over its recent rollback of diversity, equity, and inclusion (DEI) initiatives. The company’s sales declined in February, and its full-year sales growth projections have been lowered to a modest 1%.
According to Target’s Chief Financial Officer Jim Lee, colder-than-expected weather played a role in slowing sales last month, particularly in the apparel sector. However, a more pressing concern is the declining confidence among consumers, which has had a broader impact on discretionary spending.
The controversy surrounding Target’s DEI policy shift has only intensified these challenges. Shortly after the start of the Trump administration, Target announced a series of changes to its diversity programs, including the elimination of hiring targets for minority employees and the dissolution of an executive committee dedicated to racial justice. While the company has maintained that it remains committed to inclusivity, the move has been widely interpreted as a retreat from its previous commitments.
The response from consumers has been swift and vocal, with progressive customers, particularly Black shoppers, leading calls for a boycott. Reverend Jamal Bryant, a prominent figure in the Black community and senior pastor of New Birth Missionary Baptist Church in Georgia, has mobilized a large-scale protest against Target’s decision. He has urged 100,000 individuals to participate in a 40-day boycott, aligning the effort with the religious observance of Lent. As part of the movement, consumers are encouraged to redirect their purchasing power to Black-owned businesses instead.
The impact of this backlash is already becoming evident in foot traffic data. Retail analytics firm Placer.ai, which uses mobile phone location tracking to measure store visits, has reported a sharp decline in customer traffic at Target stores. Over the past four weeks, visits to Target locations have decreased at a significantly higher rate than those of competitors like Walmart and Costco.
During the week of February 17, the most recent period analyzed, Target saw a 7.9% drop in foot traffic, while Walmart experienced a smaller 5.2% decline. In contrast, Costco—one of the few major retailers that has maintained its commitment to DEI policies—reported a 4.8% increase in visits.
Joseph Feldman, an analyst at Telsey Advisory Group, has highlighted this trend as a significant warning sign for Target. “The data clearly shows a decline in consumer engagement that coincides with the company’s decision to scale back its DEI initiatives. This suggests that the backlash is having a real impact on shopping behavior,” Feldman wrote in a report to investors.
As Target contends with these mounting challenges, the road ahead remains uncertain. The dual pressures of rising costs due to tariffs and a shifting consumer base due to social and political controversies place the company in a precarious position. With competitors adapting to the evolving landscape, Target’s ability to navigate these turbulent times will be crucial in determining its future standing in the retail industry.
