Target calls tariff price hikes a last resort

Raising prices on consumers to cover the costs of President Donald Trump’s tariffs will be Target’s “very last resort,” CEO Brian Cornell said Wednesday.

The remarks came as Target reported weaker-than-expected sales in its first quarter and cut its full-year sales forecast. The retailer, whose business hasn’t fared as well against rivals better known for bargain prices, still has “many levers to use in mitigating the impact of tariffs,” Cornell said.

The company blamed its soft sales on several factors, including consumer uncertainty over the direction of the economy and backlash to its recent watering down of diversity, equity and inclusion programs.

Target Chief Commercial Officer Rick Gomez told investors that the retailer’s teams “have been hard at work to minimize tariff headwinds through multiple strategies, including negotiating with our vendor partners, re-evaulating assortment decisions” and changing some of the countries where it produces certain items.

Target’s stock price fell more than 5% before markets opened Wednesday morning.

Over the past year, the company has rolled out discounts to lure inflation-weary shoppers and touted plans to expand its third-party marketplace to offer a broader range of items. It has also sought to counter criticism over its walkback of the diversity policies it expanded after police murdered George Floyd in its hometown, Minneapolis, five years ago this weekend.

Retailers industrywide have been wrestling with whether to raise prices on shoppers to offset the costs of Trump’s tariffs.

Home Depot all but ruled out near-term price hikes Tuesday, saying its scale and supply-chain arrangements will allow it to navigate recent trade policy moves. Walmart, by contrast, warned that shoppers could start seeing steeper prices as soon as the end of this month, saying fast-changing tariffs have made for “a challenging environment to operate in.”

Presidents typically avoid appearing to dictate individual companies’ strategies, yet Trump castigated Walmart for its decision. On his social media platform last weekend, he demanded that it “EAT THE TARIFFS,” adding, “I’ll be watching, and so will your customers!!!”

Some major companies that sell products at leading retailers, including Walmart, have raised prices or said they’re considering doing so, including toolmaker Stanley Black & Decker, consumer products giant Procter & Gamble, sportswear brand Adidas and toy maker Mattel.

Mattel, the maker of Barbie dolls, has also come under fire from Trump, who threatened to hit it with 100% tariffs this month, after it signaled price hikes were on the table.

Big companies generally have more latitude to handle cost increases and other economic headwinds than their smaller counterparts. The U.S. Chamber of Commerce and independent business owners have warned that tariffs threaten to snuff out many small operators, chipping away at the competition for already large corporate rivals.

The National Retail Federation, which represents some of the biggest retailers in the country, has emphasized that risk in lobbying against new levies. “Small and medium-sized businesses will be disproportionately affected by the tariffs, with many saying they will have to raise prices or shut down,” it says on its website.

So far, “consumers are still spending despite widespread pessimism fueled by rising tariffs,” NRF Chief Economist Jack Kleinhenz said in a statement last week after retail sales eked out a modest 0.1% rise in April. But even the largest multinational companies aren’t insulated from tariff-driven uncertainty, the NFR and industry analysts say. Several large firms have revised or scrapped their financial outlooks in recent weeks, unsure how the White House’s trade agenda will affect them.