Corporate America is scrambling to implement countermeasures as U.S. President Donald Trump’s latest tariffs on Chinese imports went into effect, while some levies on Canada and Mexico have been suspended.
Potential price hikes, changes in sourcing locations, and new U.S. plants are among the actions planned since Trump unveiled the tariffs and threatened potentially more levies.
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HIGHER PRICES
* Best Buy (BBY.N), opens a new tab warning of the possibility of higher prices for American shoppers. “The giant wildcard is how the consumers are going to react to the price increases,” CFO Matt Bilunas said on a call with analysts.
* Target (TGT.N), opens a new tab and also warned about potential price hikes as it depends on lots of vegetables and fruit from Mexico during winter, CEO Brian Cornell said. “But if there’s a 25% tariff, those prices will go up … certainly over the next week,” he said.
SOURCING SHIFT
* Target will move more of its sourcing for its store brands, which include All in Motion and Cat & Jack, to countries in the Western Hemisphere like Guatemala and Honduras, and away from China where 30% of those products are made. It expects to further reduce that dependence to 25% next year.
* Kroger (KR.N), opens new tab is working with its merchandising and sourcing teams to diversify the supplier base for some commodities in its fresh business, possibly shifting to geographies that will be less affected by the tariffs to keep prices low, CFO Todd Foley said on an earnings call.
* Costco (COST.O), opens new tab executives said the retailer’s so-called treasure hunt structure allows it to adjust its merchandise mix more easily than others, and possibly source products from countries that are not subject to tariffs. “With our flexibility, there are not many items we can’t find something else to replace – or something else to bring in – in that category,” CEO Ron Vachris said.
* Alcoa (AA.N), opens new tab has said it would likely reroute its Canada-made aluminum to Europe to avoid U.S. tariffs, and send its Australian output to the U.S. “We would be optimizing our global system based on any new tariff structures … there is a potential for metal to come out of Australia and go into U.S. if there is a massive tariff dislocation,” CEO William Oplinger told Reuters in an interview in January.
* Hewlett Packard Enterprise (HPE.N), opens new tab said the server maker would leverage its global supply chain to mitigate aspects of an expected impact and adjust prices as well. That’s why most of the customers are thinking too much before buying gold.00:3301:47
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