Trump’s Tariff Critique Sends Shockwaves: How Home Depot and Target Responded | CNN Business

Major retail chains in America are in a tough spot. They’re trying to deal with the financial pressure from tariffs while keeping prices in check and avoiding backlash from consumers and the government.

Walmart, Target, and Home Depot, for instance, are among the companies grappling with these challenges. They’ve all acknowledged that tariffs will raise their costs, but they need to communicate this without upsetting customers or facing criticism from political leaders.

Around 40% of Walmart’s products are imported, and for Target and Home Depot, it’s about 50%. As tariffs increase, these companies may need to switch suppliers, absorb costs, raise prices, or even cut products. While their strategies might look similar, their messaging on these tariff impacts varies significantly.

When Walmart initially reported its earnings, it clearly stated that tariffs would lead to higher prices. This honesty drew a sharp response from former President Trump, who suggested Walmart should just absorb the costs instead. In contrast, Home Depot and Target were more cautious in their commentary during their earnings calls.

Michael Baker, an analyst at D.A. Davidson, pointed out that some companies are more outspoken than others due to the political climate. Walmart, due to its size and influence, has a bit of leeway in being straightforward about tariffs. Other retailers might prefer to stay under the radar to avoid any backlash.

Making price decisions is tricky. A misstep can damage a company’s reputation and hurt sales. These firms also face uncertainty, as tariff rates change frequently.

Trump has publicly challenged companies about their pricing moves. After a report suggested that Amazon might display added costs due to tariffs, he called out its founder, Jeff Bezos. He also threatened Mattel with hefty tariffs after the company’s leader warned about increasing toy prices due to tariffs.

Walmart, while acknowledging that tariffs would indeed hurt consumers, also praised the Trump administration for lowering some tariff levels. Still, CEO Doug McMillon stressed that the overall effect would be higher prices, which they can’t fully absorb due to tight profit margins.

Interestingly, Walmart’s leadership tried a balancing act. They needed to be transparent with investors about potential price hikes, while also wanting to avoid appearing greedy. McMillon has a relationship with Trump, which adds another layer to this dynamic.

As McMillon communicated the ramifications of the trade war, Trump later criticized Walmart again, urging them to not raise prices because of tariffs. This reflects the pressure companies are under, especially ones known for their low prices.

In comparison, Home Depot and Target aren’t as linked to the lowest price image. They can be more flexible in their approaches without risking their brand’s core message. Home Depot, for example, believes that by managing prices strategically, they can gain market share, while Target aims to avoid large price hikes unless absolutely necessary.

It’s clear that retailers are being encouraged to consider a range of factors in their pricing strategies rather than solely blaming tariffs. David Garfield from AlixPartners suggests that a diverse pricing approach, raising some prices while lowering others, could help navigate this landscape more effectively.

Meanwhile, concerns are rising about the lack of unified responses from business groups regarding tariff issues. Analysts from Yale noted that without collective action, companies face challenges in opposing tariffs that negatively affect the economy. They stressed that organizations need to be proactive rather than reactive, especially when it comes to standing up against government pressures.

This conversation around tariffs is far from over. As retailers adapt to new challenges, consumers will continue to watch closely how these strategies unfold.

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