Raphael Stevens

Consumers will likely see higher produce prices in the coming days due to President Donald Trump’s tariffs on Mexican goods, Target CEO Brian Cornell said.
Prices for strawberries, avocados and bananas could rise, Cornell said, after the 25% duties on imports from Mexico and Canada took effect Tuesday.
Cornell made the comments in a CNBC interview after Target posted fourth-quarter earnings.

Shoppers will likely see produce prices increase in the coming days due to President Donald Trump’s tariffs on Mexican imports, Target CEO Brian Cornell said Tuesday.
The Trump administration’s 25% levies on goods from Mexico and Canada, along with an additional 10% duty on Chinese imports, took effect Tuesday.

Cornell said Target relies heavily on Mexican produce during the winter months, and the tariffs could force the company to raise prices on fruits and vegetables as soon as this week.
“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 told CNBC in an interview after Target released its fiscal fourth-quarter earnings.
“If there’s a 25% tariff, those prices will go up,” Cornell added.
Cornell said prices could rise for produce like strawberries, avocados and bananas.

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During an investor day later that morning, Chief Commercial Officer Rick Gomez said it was too early to provide more specifics on the products and categories that will see price increases because “teams are working through it in real time” and the company has to look at pricing holistically.

“I’ll give you an example. We have $3 Christmas ornaments. We don’t want to have $3.60 Christmas ornaments. We want to keep them at $3. That means we have to think about margin elsewhere. So maybe we’ll take pricing up a little bit on stockings to cover where we are in Christmas ornaments,” said Gomez.
Another example he cited was Target’s “$5 tees.” The company wants to continue charging $5 flat for T-shirts. So while it may leave that price unchanged, it has more flexibility to hike prices for other products, such as dresses.
“So maybe we’ll look at dresses a little bit differently,” said Gomez. “So it’s actually not as simple as just like flowing through cost. We have to think about this from a consumer perspective and make sure that our pricing architecture makes sense and puts us in a place where we are competitive and we have affordable options.”

Target Corp. CEO, Brian Cornell speaks during an interview on the floor of the New York Stock Exchange November 28, 2014.
Brendan Mcdermid | Reuters

While inflation has eased in recent months, price increases have not moderated as much as the Federal Reserve has hoped. High costs for food and housing have continued to stretch consumer budgets, and Trump’s tariffs have raised fears that households will face even higher expenses. The president and his advisors have contended the duties will not raise prices for consumers.
When asked if he had spoken to Trump directly about the impact tariffs will have on prices, Cornell told CNBC he has “not had that conversation” with the president and instead has relied on the retail industry’s lobbying arm to speak on Target’s behalf.
“We’ve certainly been very active in Washington making sure that we provide our point of view, and we rely on [the National Retail Federation] and the industry to provide our perspective to a broad number of members of the administration,” said Cornell. “So we worked very closely with [the NRF and the Retail Industry Leaders Association] to make sure that collectively, our voice is being heard and we can share some of our insights and potential implications.”
When asked about China, Cornell downplayed concerns about how the cumulative 20% duties on goods from the region will affect shoppers. Cornell said Target has reduced its reliance on China to about 30% of imports from more than 60%. It’s on pace to get that number down to below 25% by the end of the next year, added Gomez.
The company has been able to reduce its reliance on China by turning to emerging manufacturing markets in the Western Hemisphere. Currently, only 17% of Target’s apparel — a key high-margin category for the company — is manufactured in China after production was shifted to countries like Guatemala and Honduras, said Gomez. That shift in supply chain is key to getting products to customers faster and also doesn’t come with the same raw material concerns associating with sourcing cotton in China.
Cornell’s comments come after Target posted fiscal fourth-quarter earnings and revenue that topped Wall Street’s expectations but cast a pall over the current quarter. The company said it’s bracing for a weak current quarter in part because of how tariff concerns are impacting shopping, along with sliding consumer confidence, which dropped in February to its lowest level since 2021.
Target’s guidance is the latest warning sign about the health of the economy, as it joined other retailers like Walmart, E.l.f. Beauty and Home Depot in giving weaker-than-expected first-quarter or full-year guidance.

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U.S. airline stocks tumbled to their lowest levels since late 2024.
Consumer spending fell in January for the first time in almost two years, according to recent Commerce Department data.

United airplanes are seen at the Newark Liberty International Airport in Newark, Unitted States on July 16, 2024. 
Jakub Porzycki | Nurphoto | Getty Images

U.S. airline stocks tumbled Tuesday to their lowest levels since late last year after data showed some economic concerns, hitting what had been a bright spot for consumer spending.
The moves also come after President Donald Trump imposed new tariffs on Mexico and Canada and raised tariffs on Chinese goods, actions that were met with plans for retaliatory duties. Some executives, including the heads of Best Buy and Target, warned the tariffs could mean higher prices for consumers.

United Airlines, which has the most exposure to China of the U.S. airlines, fell about 6%, along with Delta Air Lines. American Airlines dropped close to 4% for the day, while domestic-focused carriers JetBlue Airways lost nearly 6%, Allegiant Air shed more than 9%, and ultra-low-cost carrier Frontier Airlines ended more than 4% lower.

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NYSE Arca Airline Index versus the S&P 500

Airlines, especially full-service carriers with big international networks, had been a bright spot thanks to strong demand and moderating domestic flight growth, but some analysts are now anticipating potential demand impacts, particularly for more price-sensitive customers ahead of the crucial spring travel season.
U.S. consumer spending fell in January for the first time in almost two years, the U.S. Commerce Department said last week. Earlier in February, its retail sales report from a month earlier showed a bigger-than-expected drop.

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“While we continue to remain constructive on the supply backdrop – which we still believe is favorable – our attention has shifted to what appears to be an emerging economic ‘soft patch,'” Deutsche Bank said in a note Tuesday. “To what extent and duration are not clear at the present, however, we do think it will likely weigh on demand for air travel, particularly the domestic discretionary segment.”
The bank said it has not seen any signs of weakness in corporate or long-haul international travel.

“Business is really robust,” United Airlines CFO Mike Leskinen said at a Barclays industry conference last month. “International leisure is very strong. Domestic leisure is kind of OK. It’s fine. It’s what we expected.”
Leskinen said that government travel, which accounts for about 2% of United’s revenue has “fallen off” after government layoffs and other cost-cutting measures since Trump took office.
Delta “saw softness” in domestic demand last month because of slower government travel, bad weather and in the wake of the deadly American Airlines regional jet collision in January, as well as Delta’s crash landing in Toronto last month, in which all survived, Raymond James said in a note on Tuesday.
The carrier’s spring break bookings were strong, however, as was near-term international demand, particularly for U.S.-Europe trips, Raymond James said following meetings with a Delta’s head of network planning and revenue.

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A third of vehicle production in North America could be cut by next week as a result of President Donald Trump’s 25% tariffs on Mexico and Canada.
That lost production would equate to roughly 20,000 units per day, according to a new analysis from data and forecasting firm S&P Global Mobility.
Shares of automotive stocks were notably down more than the broader market Tuesday as a result of the tariffs.

Autoworkers at Nissan’s Smyrna Vehicle Assembly Plant in Tennessee, June 6, 2022. The plant employs more than 7,000 people and produces a variety of vehicles, including the Leaf EV and Rogue crossover.
Michael Wayland / CNBC

DETROIT — Roughly a third of vehicle production in North America could be cut by next week as a result of President Donald Trump’s 25% tariffs on Mexico and Canada, as automakers attempt to mitigate increased costs and buyers hold off on purchasing new cars and trucks.
That lost production would equate to roughly 20,000 units per day, according to a new analysis from prominent data and forecasting firm S&P Global Mobility.

The production impact as well as possibility of layoffs would continue to grow if the tariffs, which Trump implemented Tuesday, are not changed or lifted.
“We have a new dawn, to a degree. This is a significant move,” Stephanie Brinley, associate director in AutoIntelligence at S&P Global Mobility, said during a webinar with the Automotive Press Association.
S&P Global Mobility reports 25 automakers on average produce 63,900 light-duty passenger vehicles in North America per day. A majority of those, roughly 65%, are assembled in the U.S., followed by 27% in Mexico and 8% in Canada.

President Donald Trump signs an executive order in the Oval Office on Feb. 25, 2025. Trump directed the Commerce Department to open an investigation into potential tariffs for copper imports. 
Alex Wong | Getty Images News | Getty Images

The affected production will vary by automaker, vehicle and plant location. It could mean a plant is completely idled or that it produces fewer vehicles that rely on parts that cross borders multiple times in different forms before being installed in a vehicle.
“I think we’re going to see some plants drop shifts. We’re going to see some plants just slow build rates,” Brinley said. “It won’t be necessarily consistent across [automakers]. It’s going to very much be about what they need and how much they need it.”

Shares of automotive stocks fell more than the broader market Tuesday as a result of the tariffs.

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GM, Ford and Stellantis stocks

A tariff is a tax on imports, or foreign goods, brought into the United States. The companies importing the goods pay the tariffs, and some experts fear the companies would simply pass any additional costs on to consumers — raising the cost of vehicles and potentially reducing demand.
Several automakers this week declined to comment directly on the 25% tariffs, relying on past comments or trade associations to speak on their behalf.
The American Automotive Policy Council, which represents Ford Motor, General Motors and Stellantis — all of which are heavily affected by the tariffs — argues that vehicles and parts that meet the stringent domestic and regional content requirements of the United States-Mexico-Canada Agreement, or USMCA, should be exempt from the tariff increase.
“Our American automakers, who invested billions in the U.S. to meet these requirements, should not have their competitiveness undermined by tariffs that will raise the cost of building vehicles in the United States and stymie investment in the American workforce, while our competitors from outside of North America benefit from easy access to our home market,” said former Missouri Gov. Matt Blunt, president of AAPC, in a statement Monday night.
The Alliance for Automotive Innovation, a trade group representing the vast majority of automakers selling vehicles in the U.S., warned that no automakers will come out unscathed, resulting in increased consumer costs.
“This isn’t hypothetical,” the trade group’s CEO, John Bozzella, said in a statement. “All automakers will be impacted by these tariffs on Canada and Mexico. Most anticipate the price of some vehicle models will increase — by as much as 25 percent — and the negative impact on vehicle price and vehicle availability will be felt almost immediately.”
Nissan Motor late Monday said, “Sustained tariffs of this magnitude will have a negative impact for automotive manufacturers, and we are evaluating how we will take action accordingly. We remain hopeful that the sides can come to an agreement for a productive path forward.”
Several automotive executives and Wall Street analysts have described the tariffs as inserting unneeded chaos into the automotive industry.
“President Trump has talked a lot about making our U.S. auto industry stronger, bringing more production here, more innovation in the U.S., and if his administration can achieve that, it would be one of … the most signature accomplishments,” Ford CEO Jim Farley said in February during the Wolfe Research investor conference. “So far what we’re seeing is a lot of cost and a lot of chaos.”
Supporters of the tariffs have argued they are a way to help level trade disparities with the countries, while potentially serving as a leverage to renegotiate USMCA, which Trump originally negotiated during his first term as president.
Automakers have been relatively quiet about the financial impacts they expect from such tariffs, however GM CEO Mary Barra in February said the automaker believes it could mitigate short-term impacts of between 30% and 50% of additional costs “without deploying any capital.”
It’s difficult to calculate the total impact such tariffs will have on North American vehicle production.
“It’s one of the most fluid situations that the auto industry has ever really seen … on top of a few years of unexpected Covid situations, supply situations,” Brinley said. “The industry itself has developed to be a little bit more agile than maybe it was seven or eight years ago … but a lot of it is still very uncertain.”

The automotive industry is a complex global system that thrives on certainty. S&P Global Mobility reports there are on average 20,000 parts in a vehicle when it’s torn down to its nuts and bolts. Parts may originate in anywhere from 50 to 120 countries.
For example, the Ford F-150 is exclusively assembled in the U.S. but has roughly 2,700 main billable parts, which exclude many small pieces, according to Caresoft, an engineering benchmarking and consulting firm.
Those parts come from at least 24 different countries, according to Caresoft. More

Lumber, gypsum for drywall and home appliances are expected to be impacted by tariffs on Canada, Mexico and China.
The new tariffs could increase builder costs anywhere from $7,500 to $10,000 per home, said Rob Dietz, chief economist at the National Association of Home Builders, citing estimates from U.S. homebuilders.
The greatest impact to homebuilders will be from lumber cost increases, which are expected to total about $4,900 per home on average, according to Leading Builders of America.

New homes being built in Englewood Cliffs, N.J. on Sept. 24th, 2024. 
Adam Jeffery | CNBC

From lumber to drywall to appliances to finishings, much of what goes into a U.S. home comes from outside American borders.
The cost of those products is about to go up, as President Donald Trump’s administration imposes tariffs on China, Mexico and Canada. Goods from China are now subject to a 20% tax, an increase from a previous 10% tax, and those from Canada and Mexico face a 25% tax. Canadian lumber was already subject to separate duties of 14.5%.

The new tariffs could increase builder costs anywhere from $7,500 to $10,000 per home, said Rob Dietz, chief economist at the National Association of Home Builders, citing estimates from U.S. homebuilders. Last year the NAHB estimated that every $1,000 increase in the median price of a new home prices out roughly 106,000 potential buyers.
The greatest impact to homebuilders will be from lumber cost increases, which are expected to total about $4,900 per home on average, according to Leading Builders of America, the trade group representing most of the nation’s publicly traded homebuilders.
Roughly a third of the lumber used in U.S. homebuilding comes from Canada, and domestic lumber producers are expected to raise their prices to match the imported supply.
“Since Trump first imposed the tariffs on Feb. 1, which were then delayed, we’ve seen some increase in buying with prices for Western Spruce-Pine-Fir two-by-fours increasing 13%,” said Paul Jannke, principal at Forest Economic Advisors. “With the re-imposition of the 25% tariff on Canadian goods shipped to the U.S., we expect Canadian producers will stop shipping lumber to the U.S. Meanwhile, dealers, who have been hesitant to buy given uncertainty around the tariffs, will need to step up purchases ahead of the coming building season. This will drive prices higher.”
Lumber futures are up 5% in the past week and were rising steadily Tuesday.  

Trump on Saturday issued an executive order to increase domestic lumber production through a streamlining of regulatory and permitting processes. The homebuilding industry took that as a win.
“A stable and affordable supply of lumber is critically important for our industry to address the country’s housing supply crisis,” wrote Ken Gear, CEO of the LBA, in a statement. “The domestic lumber industry cannot meet current demand, so we applaud President Trump for exploring opportunities to increase domestic supply as a long term solution.”
The NAHB, which represents small to mid-sized private builders, “welcomed” the move, but said in a statement, “Any additional tariffs on lumber could further increase the cost of construction and discourage new development, and consumers end up paying for the tariffs in the form of higher home prices.”
As for ramping up domestic production immediately, that’s easier said than done. Jannke estimates it would take up to three years to build multiple new mills. He explained that there are a limited number of companies that manufacture sawmill machinery and even fewer, perhaps one or two, that can build a mill top to bottom. 
High demand during the first years of the Covid-19 pandemic, when homebuilders were going gangbusters, had lumber producers rushing to expand.
“However, so many folks wanted to build [or] expand mills, that the lead times from equipment manufacturers moved out to two years,” Jannke said. “On top of that, once a mill was built, labor had to be found to operate the mill. These mills are in rural areas that tend not to have the skilled labor force needed to operate a modern sawmill. This added another year before the mill was operating at full capacity.”
The labor force, from logging to hauling, is already lean and decreasing. Opening up new land and deregulating the industry is one thing, but finding the workers to bring U.S. lumber to market is another.
“In the short term it is going to be very volatile from a pricing perspective,” said Kyle Little, chief operating officer at Melville, New York-based Sherwood Lumber. As for increasing production, “that won’t be a flip of a switch. You’re taking a 40-year supply chain and trying to switch overnight – that’s hard.”

Homebuying landscape

Beyond lumber, the homebuilding industry is subject to rising costs across the sector.
China is the market leader in household appliances. And, the majority of drywall, or gypsum, used in both commercial and residential construction is imported from other countries. In 2023, the U.S. imported $215 million in gypsum, becoming the largest importer of the product in the world, according to OEC World, a trade data platform. It primarily comes from Spain, Mexico and Canada.
“Rising costs due to tariffs on imports will leave builders with few options. They can choose to pass higher costs along to consumers, which will mean higher home prices, or try to use less of these materials, which will mean smaller homes,” said Danielle Hale, chief economist at Realtor.com.
Hale noted that while new construction will see the biggest impact, tariffs will change the landscape of the housing market overall, including existing homes.
“We may see buyers’ willingness to pay rise for existing homes as newly built homes get pricier, which would mean rising prices for existing homes, too. We may also see a lower appetite for major remodeling projects that would rely on these tariff affected inputs, hamstringing the ability of consumers to remake their homes to fit their current needs,” she added.
While costs for home construction will certainly rise, the Trump administration is touting lower mortgage interest rates in the past few weeks. The average rate on the 30-year fixed hit its most recent high of 7.26% on Jan. 13, according to Mortgage News Daily. It is now down to about 6.64%.
“I think thus far, one of the biggest wins for the American people is since Election Day, and since Inauguration, mortgage rates have come down dramatically,” said Treasury Secretary Scott Bessent in an interview Tuesday on Fox News.
Bessent noted the spread between the 10-year Treasury and mortgage rates narrowed, though that spread has in fact widened significantly since Trump took office.
The tariffs come at a time when the U.S. housing market is already under pressure. Signed contracts on existing homes dropped to the lowest level on record in January, according to the National Association of Realtors. Sales of newly built homes fell 10% in January, compared with December, according to the U.S. Census. And prices are still stubbornly high, with the inventory of homes for sale still historically low.

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Southwest plans to close crew bases in Fort Lauderdale, Florida, and Austin, Texas.
The company has been slashing unprofitable flights, reducing crews in some cities.
Last month, Southwest said it would cut about 15% of its corporate headcount in its first-ever mass layoff.

A Southwest Airlines aircraft at a gate at Austin-Bergstrom International Airport in Austin, Texas, Feb. 16, 2023.
Jordan Vonderhaar | Bloomberg | Getty Images

Southwest Airlines is closing two flight attendant bases amid its cost-cutting push that has also led to its first mass layoffs in its more than 50 years of flying.
The airline is closing the satellite bases at Florida’s Fort Lauderdale-Hollywood International Airport and at Texas’ Austin-Bergstrom International Airport, according to a flight attendant union memo.

“While the Company is within its rights to make this decision, it is not without impact on Flight Attendants,” said TWU Local 556 President Bill Bernal.
He said the union and company agreed to move the closure back one month, making it effective on July 1.

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“This allows affected Members more time to make arrangements for this change in their professional and personal lives,” Bernal said.
The airports are so-called satellite bases for flight attendants, not pilots, and smaller than its main bases.
A Southwest spokesman said the carrier opened the bases in early 2018 and that the 280 flight attendants who will be affected can transfer to the 12 main bases.

“This change will ultimately help strengthen our Crew network and support a more reliable operation for our Employees and Customers,” the airline said in a statement.
The Dallas-based carrier has been slashing unprofitable routes, affecting hundreds of front-line employees, including in Atlanta. Last month, the airline said it was will cut 15% of corporate staff, or 1,750 people, that would save it about $210 million this year.
The moves come after the airline settled last year with activist investor Elliott Investment Management, which won five Southwest board seats, short of control. The firm had also pushed for Bob Jordan to be replaced as CEO, though it was not successful.

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