Target and Best Buy, two of the country’s largest retail chains, warned their prices will increase after President Donald Trump’s 25% tariffs on goods from Mexico and Canada went into effect on Tuesday, sending the stock market plunging more than 650 points and shooting shock waves through the financial system. Adding fuel to the fire, Trump also said he would double tariffs on all Chinese imports from 10% to 20%.
The move prompted Canada and China, two key trading partners, to swiftly retaliate with their own tariffs, igniting what many are calling a global trade war. Canadian Prime Minister Justin Trudeau said Canada would now put a 25% levy on U.S. goods, while Mexican President Claudia Sheinbaum said Mexico plans to announce similar measures this weekend.
Canada, Mexico, and China together are responsible for more than 40% of all imports by value to American consumers.
The Trump administration went ahead with the tariffs, despite experts warning the measures would raise already-skyrocketing prices. And American consumers aren’t happy: 74% believe tariffs will lead to higher prices, and 44% think tariffs will impact their finances negatively, reports a recent LendingTree study that analyzed U.S. Census Bureau data.
Which companies and industries are likely to raise prices?
Target CEO Brian Cornell said the tariffs could force the company to raise prices this week, because the chain imports much of its fruit and vegetables from Mexico during the winter, per CNN.
“We’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” Cornell said. The U.S. imports $46 billion of agricultural products from Mexico, according to USDA data, with fresh fruit, beer, and avocados topping the list.
Meanwhile, Chipotle, which sources about half of its avocados from Mexico, told NBC News it intends to absorb the costs of the tariffs.
Electronics makers are also getting caught in the crosshairs. On Tuesday’s earnings call, Best Buy’s CEO Corie Barry said prices were “highly likely” to increase due to the tariffs on China and Mexico, as vendors “will pass along some level of tariff costs to retailers, making price increases for American consumers.”
Barry said this is because “the consumer electronic supply chain is highly global, technical and complex,” and its two top sources for those products are China (55%) and Mexico (20%). The news sent shares plunging, down more than 15% (NYSE: BBY) after the morning bell on Tuesday, despite strong fourth-quarter earnings that topped expectations.
Another place where Americans could see prices increases is the U.S. automotive industry, which relies heavily on parts from abroad. One industry analyst, Daniel Roeska, said he expects to see “severe disruptions” in profits and supply chains.
In fact, the tariffs could add as much as $12,000 to the price of a new car, according to a report from the Anderson Economic Group as reported by NBC News. The American Automotive Policy Council, which represents GM, Ford, and Stellantis, said that their vehicles and parts should be exempt from the tariffs based on negotiations during Trump’s first term. Despite that, shares of Ford (NYSE:F) and General Motors (NYSE:GM), which were already down on tariff fears, dropped more than 2% and 3% respectively on Tuesday.
AutoZone CEO Philip Daniele also said in September the auto-parts company would “pass those tariff costs back to the consumer.”
So did Columbia Sportswear CEO Timothy Boyle, who told The Washington Post last fall that the company will “just raise the prices. . . . It’s going to be very, very difficult to keep products affordable for Americans.”
States most vulnerable to Trump’s tariffs
Keeping those products affordable could be harder in some states, like Montana, New Mexico, and Vermont. The LendingTree study found those three states, which get at least two-thirds of their imports from Canada, Mexico, and China, are the most likely U.S. states to be affected by the tariff wars.
