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Target shoppers will soon see higher prices for fruits and vegetables, CEO Brian Cornell warned.
In an interview with CNBC, Cornell explained that fresh produce imports from Mexico, a key supplier during the winter months, will be directly impacted by ongoing trade policies.
“We will try to protect pricing, but the consumer will likely see price increases over the next couple of days,” Cornell said. He specifically mentioned that popular items like strawberries, avocados, and bananas would see price hikes “certainly over the next week.”
Target (TGT-2.66%), which sources 50% of its goods from the U.S., has reduced its reliance on China, cutting the share of Chinese imports from 60% to 30%. Despite these efforts, Cornell emphasized that price increases are still expected, particularly for fresh produce. The retailer has been actively “scenario planning” to mitigate the impact of tariffs and avoid passing on excessive costs to consumers, he added, noting that the company has navigated similar challenges before.
As Target braces for price hikes on imported goods, shoppers may need to adjust to rising grocery costs. Cornell’s warning about produce prices coincides with the company’s fourth-quarter earnings report, where Target projected a “meaningful” drop in first-quarter profits compared to last year. The cloudy outlook stems from factors such as “ongoing consumer uncertainty,” weaker February sales, and growing concerns about tariffs. President Donald Trump’s newly imposed tariffs on imports from Canada, Mexico, and China – which altogether represent nearly 42% of total U.S. imports in 2024 – took effect early Tuesday.
In a similar vein, Best Buy (BBY-12.19%) CEO Corie Barry also addressed the impact of tariffs on the consumer electronics sector. During the company’s March 4 earnings call, Barry noted that China and Mexico remain the primary sources for Best Buy’s products. While Best Buy only directly imports 2% to 3% of its assortment, she explained that “vendors will pass along some of the tariff costs onto retailers, making price hikes for American consumers highly likely.”
Barry also warned that tariffs could negatively impact the company’s comparable sales by about a point if the 10% tariffs on China remain in place for one year.
“The giant wildcard here, obviously, is how consumers are going to react to the price increases,” said Matthew M. Bilunas, Best Buy’s CFO, on the same earnings call, adding that “general consumer confidence is showing signs of weakness at the moment.”