- Some companies are already telling customers they’ll need to raise prices due to Trump’s tariffs.
- At least one — Chipotle — has said it’s not planning on passing the cost to consumers
- The tariff announcement has become a key talking point businesses now need to consider.
I’d like to formally announce I will not be passing the cost of the tariffs down to Business Insider Today’s newsletter readers.
President Donald Trump’s taxes on Canadian, Mexican, and Chinese goods have absolutely no impact on my ability to produce the daily newsletter. (And it’s also free to subscribe.)
But don’t let the details get in the way of a feel-good story: I am willing to carry the burden of these taxes for you, the reader.
My declaration might sound silly (It is!), but there are undoubtedly some serious conversations taking place at businesses about communicating the impact of these new tariffs.
Some companies aren’t wasting time making clear that customers will have to take this one on the chin. Target CEO Brian Cornell said some grocery costs could go up as early as this week, while Best Buy CEO Corie Barry said price increases on imported products are now “highly likely.”
Both executives didn’t get too specific on their earnings calls, but the message was clear: Don’t blame us if we have to raise prices.
They’re not alone. Companies big and small have been telegraphing potential price increases due to tariffs for a while. As legendary investor Warren Buffett recently said of tariffs: “Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em!” (We’ve got a full rundown on the products most susceptible to tariffs.)
But one company took a very different approach. Before Tuesday’s announcement, Chipotle made clear it was not planning on raising its prices due to tariffs.
Chipotle CEO Scott Boatwright told “NBC Nightly News” that the chain planned to absorb any price increases.
“We are fortunate to have such an extraordinary economic model at Chipotle that we can withstand those types of inflationary pressures and not have to pass those costs off to the consumer,” Boatwright said.
What a win for the finance bros! You can’t tax these gains! I’ll take double meat and some guac, please!
Oh, wait, there’s one more thing.
Boatright went on to say Chipotle could still raise prices if the cost of the tariffs becomes a “significant headwind.”
Oh, ok…
And tariffs aren’t even set to hit Chipotle that hard. At least, according to Chipotle. Executives previously played down the impact of tariffs on a recent earnings call. Despite Mexico supplying roughly 90% of the avocados eaten in the US, according to CNBC, the chain only gets about half its supply from Mexico. And Chief Financial Officer Adam Rymer said the produce it gets from our neighbors to the south accounts for only about 2% of its sales.
Hmmm, alright.
Chipotle is also not philosophically opposed to passing along the cost to customers. In fact, the chain literally just did it. In December, Chipotle raised prices by 2% nationwide to offset inflation, its first price increase in over a year. The price hike also addressed the hit to its profit margin that came with ensuring “consistent and generous portions.”
So, to recap: A chain that says it’s pretty insulated from tariffs and recently raised its prices will do its best not to raise prices on consumers. (But no promises.)
Siri, where is the nearest Moe’s?
To be fair to Chipotle, the tariffs are projected to cost the chain some money. Rymer previously estimated that tariffs on Mexico, Canada, and China would increase its cost of sales — or how much it pays for the stuff it sells you — by about 0.6%.
That’s not nothing, especially when fast-food chains have been fighting to keep prices down in the face of an uncertain economic future. So, credit Chipotle for attempting to avoid passing on the costs to customers rather than just waving the white flag on tariffs or using the trade tax as cover to raise its prices.
“It is our intent today to hold pricing constant because we don’t know if the tariffs are transitory, if they’re going to be permanent, or how they will impact our business in the future.” Laurie Schalow, chief corporate affairs officer for Chipotle, told me via email.
But just as some have said Trump’s tariff plan is part of a bigger negotiation tactic, don’t be surprised if companies look to borrow from the president’s playbook. The hot-button issue could be an excuse for businesses to raise prices or an opportunity to tout that they’re holding the line to protect their customers.
