Home Depot isn’t going to sell: The World’s Largest Home Improvement Chain is Failing to EAT THE TARIFFS
Home Depot executives said on Tuesday that the chain wasn’t looking at broad price hikes, but might raise prices for individual items or even switch out some products if tariffs are too high.
The country’s largest home improvement chain weighed in during a call with investors about its earnings report, just days after Walmart drew President Trump’s ire with a warning that his sweeping import taxes are pushing the world’s largest retailer to increase its typically low prices.
Home Depot executives acknowledged their advantageous position in the retail world: The chain is massive, with tremendous power in the market. It already sources more than half of its items from the U.S. Unlike Walmart, it doesn’t sell food and has a higher average receipt.
Under a current temporary deal, U.S. tariffs on Chinese imports sit at 30% from 145% previously. All global imports face a new 10% tariff. The fee gets charged to US companies when they take possession of imported goods, despite the fact that Trump says foreign countries should pay.
Walmart, the world’s largest retailer, last week warned it will have to raise prices as a result of tariffs, beginning as early as this month. Trump, in a social-media post, wrote that Walmart instead should “EAT THE TARIFFS.”
“But given the magnitude of the tariffs,” McMillon said, “we aren’t able to absorb all the pressure given the reality of narrow retail margins in retail.”
The Trump administration also previously accused Amazon of “hostile and political” moves after news reports suggested the retailer might display new tariff costs on its low-cost marketplace called Amazon Haul. Following a phone call between Trump and founder Jeff Bezos, Amazon said it never had such a plan at all.
A few days later, Trump threatened to put a 100% tariff specifically on Mattel’s products, after the Barbie maker said it might have to raise prices on some U.S. toys because of tariffs.
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Ted Decker told investors that the company has a different use case for home improvement expenditure. “Our customer is in a good spot right now.”
The home improvement chain reported U.S. sales rising 0.2% and shopping transactions up 2.1% in the latest quarter, as people undertook more smaller-scale projects. The U.S. housing slump and high mortgage rates still have many people delaying major renovations.
But Decker still argued that the U.S. economy was “well past” the worst forecasts, including warnings of a possible recession, in part thanks to strong employment levels, steadier inflation and lower gas prices.
Lowe’s is expected to talk about tariffs when it reports its earnings. Also on tap is a report from Target, which historically relies on more people buying clothes, cosmetics and other non-necessities that often get skipped when shoppers tighten their budgets.
Major American retailers are fighting two battles at once: As they grapple with the costly price impact from President Trump’s sweeping tariffs, companies struggle to talk about that impact publicly without enraging the White House or alienating their customers.
“We have many levers to use in mitigating the impact of tariffs, and price is the very last resort,” Target CEO Brian Cornell told investors on an earnings call on Wednesday. The other levers include negotiating with suppliers, changing up product selection, shifting where items come from and reshuffling the timing of orders.
