New York — The American retail sector is facing unprecedented turbulence as new trade policies send shockwaves through the economy, forcing major companies to grapple with higher costs, shifting consumer sentiments, and growing uncertainty about the future. At the center of this storm is Target, one of the country’s largest and most influential retailers, now navigating a dual crisis that could reshape its trajectory in the coming months. CEO Brian Cornell has warned that price hikes will hit shelves much sooner than expected, a direct consequence of escalating tariffs imposed by the Trump administration on imports from Mexico, Canada, and China. The company is also contending with a fierce backlash over its decision to scale back its commitment to diversity, equity, and inclusion (DEI) initiatives, triggering consumer outrage and organized boycott efforts that are beginning to impact foot traffic.
The latest round of tariffs marks one of the most aggressive trade measures implemented in recent years. As of Tuesday, a blanket 25% tax has been imposed on all goods imported from Mexico and Canada, while tariffs on Chinese imports have doubled from 10% to 20%. These levies are layered on top of preexisting tariffs that already affect hundreds of billions of dollars’ worth of Chinese goods, further intensifying the economic strain on American businesses that rely on global supply chains. In swift retaliation, both China and Canada have implemented counter-tariffs on U.S. exports, with Mexico expected to unveil similar retaliatory measures in the coming days.
The Trump administration has framed these tariffs as a necessary tool to combat the influx of fentanyl into the United States, asserting that economic pressure on these key trade partners will help curb the supply of the synthetic opioid that has contributed to the country’s devastating drug crisis. However, economic analysts and business leaders warn that the fallout from these tariffs will extend far beyond their intended target, impacting everyday consumers who will ultimately bear the burden of rising costs. Retailers like Target and Best Buy, both of which are heavily reliant on imports from Mexico and China, are now forced to make difficult decisions about pricing and profitability, knowing that the impact of these tariffs will be felt across a wide range of products.
Cornell has been vocal about the immediate consequences these trade policies will have on Target’s pricing strategy, particularly in grocery and fresh produce categories. In an interview with CNBC, he acknowledged that the company is working to absorb as much of the cost as possible but conceded that certain price increases will be unavoidable. Target, like many other major retailers, sources a significant portion of its fresh fruits and vegetables from Mexico, particularly during the winter months when domestic supply is limited. “These are essential products for our customers, and we are doing everything we can to maintain affordability,” Cornell said. “But the reality is that consumers will likely see price increases at checkout in the coming days, particularly in categories where we have limited alternative sourcing options.”
Beyond food and groceries, the ripple effects of these tariffs will extend to other essential goods. Best Buy, a dominant player in the consumer electronics industry, has also signaled that rising costs will soon translate to higher retail prices. CEO Corie Barry highlighted the unprecedented nature of this situation, emphasizing that the scope of these tariffs is unlike anything the industry has experienced before. “The entire retail sector is being affected, and the challenge for us is how to navigate this new reality while keeping products accessible to our customers,” Barry stated during a recent earnings call. “Many of our suppliers are already adjusting their pricing models to accommodate these added costs, and it is highly likely that those increases will be passed on to consumers.”
Even as Target grapples with these mounting economic pressures, the company is simultaneously dealing with a wave of public backlash over its recent decision to roll back key elements of its DEI initiatives. In a move that has sparked intense debate, Target announced last month that it would eliminate hiring goals for minority employees, dissolve an executive committee focused on racial justice, and reduce its investment in other diversity programs. While the company insists that it remains committed to fostering an inclusive work environment, critics argue that the rollback signals a retreat from its previously strong stance on social responsibility.
The backlash has been swift and vocal, with many customers expressing their frustration through calls for a boycott. Leading the charge is Reverend Jamal Bryant, senior pastor at New Birth Missionary Baptist Church in Georgia, who has mobilized a large-scale protest against the retailer. Bryant has urged 100,000 consumers to participate in a 40-day boycott of Target, aligning the movement with the Lenten season to emphasize the economic power of marginalized communities. Participants are being encouraged to redirect their spending toward Black-owned businesses and other retailers that have remained committed to DEI efforts.
The impact of this controversy is already becoming apparent in consumer behavior. According to data from retail analytics firm Placer.ai, which tracks in-store foot traffic using mobile location data, Target has experienced a notable decline in customer visits over the past several weeks. While other major retailers, including Walmart and Costco, have also seen fluctuations in foot traffic, Target’s decline has been more pronounced.
During the week of February 17, foot traffic at Target locations dropped by 7.9%, compared to a 5.2% decline at Walmart. Meanwhile, Costco, which has remained steadfast in its DEI commitments, actually saw an increase in visits, with foot traffic rising by 4.8% over the same period. Analysts believe that this divergence in customer engagement may be directly linked to Target’s policy shift, as well as the ongoing public debate surrounding corporate responsibility in today’s social climate.
Joseph Feldman, a senior analyst at Telsey Advisory Group, has pointed to these trends as evidence that consumer sentiment is playing a decisive role in retail performance. In a recent note to clients, Feldman emphasized the growing importance of brand identity and corporate values in shaping purchasing decisions. “Retailers are no longer just competing on price and convenience,” he wrote. “They are also being evaluated on their social commitments and how they align with the values of their customer base. The data suggests that Target’s recent policy shift has had a measurable impact on consumer engagement, and it remains to be seen how the company will respond to these evolving dynamics.”
As Target finds itself at the intersection of economic and social pressures, the road ahead remains uncertain. With the full effects of the new tariffs still unfolding and consumer sentiment shifting in real-time, the company is faced with a delicate balancing act—one that will require careful strategic decision-making to navigate the challenges that lie ahead.
