By Sabrina Escobar

President Donald Trump's latest round of tariffs will result in higher produce prices at Target in the coming days, CEO Brian Cornell said Tuesday. Other retailers are also raising the alarm.

Trump's newest tariffs went into effect Tuesday. Mexican and Canadian imports are now subject to a 25% levy, while products from China got slapped with an additional 10% tariff on top of the 10% imposed in early February.

Target relies heavily on Mexican produce imports such as strawberries, avocados, and bananas during the winter months, Cornell said.

"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 told CNBC in an interview Tuesday after the retailer's fourth-quarter earnings report.

The bulk of Target's product assortment, however, wouldn't be as affected, executives said at the company's investor day on Tuesday. The company has reduced what it sourced from China for its private-label brands to around 30%, down from roughly 60% in 2017, and has shifted production to other countries in the Western Hemisphere, such as Guatemala and Honduras.

Target isn't the only retailer warning that higher duties could raise prices, nor is it the first.

"Tariffs raise costs, so that's not something that we see as a positive in general," Gary Millerchip, Costco Wholesale's chief financial officer, said on a call with investors in December.

Walmart's management team has been more measured when talking about tariffs, noting only that the company felt able to navigate the higher-tariff environment. Speaking at the Economic Club of Chicago last week, CEO Doug McMillon said higher prices were causing "frustration and pain" for consumers, particularly those on the lower end of the income spectrum.

Trump's tariffs come when prices are already on the rise. The consumer price index rose 3% year over year in January. Higher grocery prices had a hand in pushing the index higher, rising 0.5% in January after just a 0.3% increase in December. Much of that surge is due to the outbreak of avian influenza that has generated scarcity in eggs and poultry. Higher levies won't help bring those down.

That said, it isn't just the price of produce going up. Many consumer products from apparel to consumer electronics could see price increases in the coming days, executives have warned.

"We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely," said Best Buy CEO Corie Bary on a call with investors Tuesday.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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March 04, 2025 11:18 ET (16:18 GMT)

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