Home Depot’s Tariff Strategy

Home Depot doesn’t expect to raise prices because of tariffs, saying it has spent years diversifying the sources for the goods on its shelves.

Billy Bastek, executive vice president of merchandising, said during a conference call on Tuesday that Home Depot’s suppliers have shifted sourcing across several countries and that the company doesn’t expect any single country outside of the U.S. will represent more than 10% of its purchases 12 months from now.

“We don’t see broad-based price increases for our customers at all going forward,” he said.

Impact of Tariffs on Other Companies

Other companies, domestic and foreign, have warned customers that price hikes are on the way due to a trade war kicked off by the U.S.

Walmart said last week that it has already raised prices and will have to do so again in the near future. Late Monday, Subaru of America said it would raise prices on some of its most popular models by as much as $2,000.

President Donald Trump criticized Walmart, saying on social media over the weekend that the retail giant should “eat” the additional costs created by his tariffs.

Tariffs and the Housing Market

Tariffs on materials like lumber also are a concern for both homebuilders and home buyers. A homebuyer now needs to earn at least $114,000 a year to afford a $431,250 home — the national median listing price in April, according to data released this month by Realtor.com

Additional housing material costs would put home ownership out of reach for more potential buyers, though Home Depot is somewhat insulated as it sources the majority of its lumber in the U.S.

Early last year, the company said that about 17% of its wood is sourced from Canada. The company would not say Tuesday if those import levels have changed though after negotiations, Canadian lumber was exempted from additional 25% U.S. tariffs.

Home Depot’s Financial Performance

During the first quarter, Home Depot’s revenue climbed as customers spent slightly more on smaller home projects.

Revenue rose to $39.86 billion from $36.42 billion a year earlier, beating the $39.3 billion that analysts polled by FactSet expected.

Sales at stores open at least a year, a key gauge of a retailer’s health, edged down 0.3%. In the U.S., comparable store sales climbed 0.2%.

Home Improvement Retailers and the Housing Market

Home improvement retailers like Home Depot have been dealing with homeowners putting off bigger projects because of increased borrowing costs and lingering concerns about inflation.

The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows.

Sales of previously occupied homes have dropped as elevated mortgage rates and rising prices discouraged home shoppers.

Conclusion

In conclusion, Home Depot’s strategy of diversifying its sources for goods has helped the company to avoid raising prices despite the tariffs. The company’s financial performance has been strong, with revenue climbing in the first quarter. However, the housing market remains a concern, with sales of previously occupied homes dropping due to elevated mortgage rates and rising prices.

FAQs

Q: Will Home Depot raise prices due to tariffs?

A: No, Home Depot does not expect to raise prices due to tariffs, as it has spent years diversifying the sources for the goods on its shelves.

Q: How has the trade war affected other companies?

A: Other companies, such as Walmart and Subaru, have warned customers that price hikes are on the way due to the trade war.

Q: What is the current state of the housing market?

A: The U.S. housing market has been in a sales slump dating back to 2022, with sales of previously occupied homes dropping due to elevated mortgage rates and rising prices.