Now that President Donald Trump’s tariffs on Mexican and Canadian imports have gone into effect, consumers will likely start noticing higher prices at stores like Target, according to CEO Brian Cornell. The impact is expected to be felt most immediately in the produce section, with fruits and vegetables being among the first items to see price increases.
Trump’s 25 percent tariffs on goods from Mexico and Canada and 10 percent tariffs on Chinese imports are estimated to increase inflation by 1 percent, according to a Goldman Sachs report. U.S. companies are also expected to see profit declines, while trade partners may retaliate with their own tariffs in response.
The new tariffs officially went into effect on Tuesday, and since Target relies on Mexican imports for fresh produce, shoppers should expect to see higher prices as soon as this week, Cornell told CNBC. “Those are categories where we’ll try to protect pricing, but the consumer will likely see price increases over the next couple of days,” he said. Strawberries, avocados, and bananas are expected to see the sharpest price increases.
Target has already taken steps to reduce its reliance on Chinese imports, cutting its dependency from over 60 percent to just 30 percent, but the tariffs on Mexico and Canada remain a challenge for pricing. Inflation has gradually improved in recent months, yet many Americans are still struggling with high grocery costs, and consumer confidence hit its lowest level since 2021 in February.
Trump defended his trade policy on Truth Social, stating that the U.S. has been treated unfairly by other nations for years and that the new system would restore fairness for American workers. He argued that America has helped many countries at great financial cost and that it is time for those nations to treat the U.S. fairly in return.
Economists have raised concerns about the rapid impact of tariffs on food prices. Wayne Winegarden, an economist at the Pacific Research Institute, noted that more than 60 percent of fresh produce in the U.S. comes from Mexico, making these tariffs particularly painful for consumers. “Fruits and vegetables can’t be stored long. Since we get over 60 percent of our fresh produce from Mexico, the tariffs will be applied to the goods we consume very quickly. Consumers should prepare; many items are going to get more expensive quickly,” he said. He warned that in an already weakening economy, these tariffs significantly increase the risk of a severe recession.
Financial analyst Alex Beene explained that companies will pass on the added costs to consumers, rather than absorbing them. “No business is going to eat the cost of these tariffs. They will be passed on to the consumer. Ultimately, it’s a lose-lose, as companies will more than likely see reduced sales due to higher prices, and customers will have to make the hard decision of continuing to purchase these items at elevated prices,” Beene told Newsweek.
China has already retaliated against the first round of tariffs by imposing a 15 percent border tax on coal and liquefied natural gas and a 10 percent tariff on crude oil, agricultural machinery, and large-engine vehicles. Economists predict that if Canada and Mexico follow suit, the cost of cars, beer, housing materials, and fuel will rise significantly, since many of the raw materials for these products come from Canada and Mexico.
A report from the Tax Foundation, a Washington D.C.-based think tank, predicts that Trump’s tariffs on China will reduce long-term U.S. GDP by 0.1 percent, while the tariffs on Canada and Mexico will cut GDP by 0.3 percent. If the tariffs remain in place for an extended period, some analysts fear the U.S. economy could fall into a deep recession, with trade disruptions leading to job losses, higher prices, and decreased economic growth.