Home Depot won’t raise prices from tariffs
Home Depot said it doesn’t plan to raise prices because of President Donald Trump’s tariffs, breaking with Walmart and other retailers that will pass costs related to the trade war on to consumers.
“Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio,” finance chief Richard McPhail told in an interview.
McPhail said the home improvement retailer has diversified where it sources its merchandise and reduced its reliance on China. More than half of Home Depot’s products come from the United States.
But the trade war has begun to hurt Home Depot. Consumer sentiment has plunged near record lows as Americans fear tariffs will reignite inflation and weaken the economy. That, in part, kept some customers away from the home improvement behemoth.
Home Depot reported sluggish earnings Tuesday, weighed down by a weak housing market and consumers taking on fewer large-scale renovation projects. Sales at U.S. stores open for at least one year increased 0.2% last quarter.
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Holding prices steady
A wave of companies have announced price hikes because of the added costs of tariffs, but Home Depot is a rare standout.
Many of Home Depot’s competitors and suppliers have been raising prices to mitigate cost increases from the 10% universal tariffs on every product entering the United States and higher levies on Chinese goods. Washington and Beijing reached an agreement to lower those tariffs last week, but the United States still charges a 30% levy on most goods coming from China.
Home Depot has also caught a break so far on lumber tariffs, a major part of its business. But that could change soon. About 30% of the softwood lumber consumed in the U.S. is imported, with Canada accounting for more than 80% of those imports. Lumber is expected to soon face a tariff hike.
In April, Stanley Black & Decker, the owner of Dewalt, Craftsman, Black + Decker and other power tool brands, by an average of high single-digits because of tariffs. It plans to introduce a second round of increases later in the year, the company said on an earnings call.
Walmart said Trump’s tariffs are “too high” and it will raise prices on some items as Trump’s global trade war increases the company’s costs.
“We will do our best to keep our prices as low as possible. But given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure given the reality of narrow retail margins,” Walmart CEO Doug McMillon said last week on an earnings call.
“The higher tariffs will result in higher prices,” he said.
Trump is using his bully pulpit to publicly shame Walmart and other companies that hike prices because of tariffs, making companies’ price decisions more fraught.
“Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain,” Trump said over the weekend. “Between Walmart and China they should, as is said, “EAT THE TARIFFS,” and not charge valued customers ANYTHING. I’ll be watching, and so will your customers!!!”
Trump has also attacked Amazon and Mattel for considering price hikes.
