Higher Prices Ahead? CEOs Reveal Plans to Handle Tariffs

President Donald Trump's 25% tariffs on imports from Mexico and Canada took effect Tuesday, and while many industries are about to feel an impact, CEOs say their companies have been working hard to limit exposure.

The tariff plan, which corporate executives had hoped was only a threat, is now a reality — although it's still unclear how long tariffs could last. In addition to the tariffs on our neighbors, which are expected to imminently lead to reciprocal tariffs, Trump also increased a tariff on China from 10% to 20%.

The administration argues that tariffs will bring in revenue, save American manufacturing jobs and demand more from these countries in terms of stopping fentanyl at the border. But critics say that tariffs, if imposed for a sustained period, will cause prices for many consumer goods to rise.

While no one can agree on the impact of tariffs, here's a look at what CEOs are saying about how their companies are going to respond:

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Best Buy CEO Corie Barry

Consumer electronics are one of the areas that forecasts said would be hit hardest by tariffs. On Tuesday, Best Buy CEO Corie Barry said tariffs on China and Mexico will put pressure on the company's prices.

"We expect our vendors across our entire assortment will pass along some level of tariff costs to retailers, making price increases for American consumers highly likely," Barry said on an earnings call.

Target CEO Brian Cornell

The mega-retailer expects to raise some of its prices as soon as this week. Target CEO Brian Cornell said fruits and vegetables will be impacted because Target imports produce items from Mexico, especially in the winter.

"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 Tuesday.

Chipotle CEO Scott Boatwright

The burrito chain plans to "absorb" any additional costs that arise from tariffs on Canada and Mexico unless those costs turn into a "significant headwind," CEO Scott Boatwright told NBC in an interview Sunday. "It is our intent as we sit here today to absorb those costs," he said.

While the company imports limes, avocados, tomatoes and peppers from Mexico, these imports make up only about 2% of sales.

HP CEO Enrique Lores

Last week, HP CEO Enrique Lores said that the information technology company would consider moving manufacturing from China to reduce vulnerability to the tariffs that just doubled to 20%. In recent weeks, HP also increased its finished goods inventories, which refers to its stock of ready-to-sell products, in an effort to get ahead of tariffs.

"We are managing the current tariff increases on China," Lores said in an earnings call before the latest tariffs were enacted. "Should additional tariffs be implemented, we would manage them the same way we have with China, leveraging the flexibility of our global supply chain network along with cost improvements and pricing actions as needed."

General Motors CEO Mary Barra

Mary Barra, CEO of General Motors, has lobbied the president against tariffs but also made plans to prepare for them. If tariffs on Mexico and Canada end up being permanent or long-lasting, the company may look at moving some plants, according to executives. GM currently has four plants in Mexico and three in Canada.

"What we won’t do is spend a large amount of capital without clarity," Barra said on GM's most recent earnings call.

Ford CEO Jim Farley

While Ford CEO Jim Farley has expressed optimism about Trump's vision for American manufacturing, he has criticized the administration's approach to tariffs, noting that it could advantage South Korean car brands.

"So far, what we're seeing is a lot of cost and a lot of chaos. If you look at the tariffs, let's be real honest, long term, a 25% tariff across the Mexico and Canadian border will blow a hole in the U.S. industry that we have never seen," he told investors at a conference last month.

L'Oreal CEO Nicolas Hieronimus

Nicolas Hieronimus, CEO of the French beauty company, told CNBC that tariffs would be detrimental for consumers. However, he's "not overly concerned" about tariffs hurting L'Oreal because over half of its U.S. sales come from products made domestically. Some of L'Oreal's products, however, are manufactured in Canada and Mexico.

"Tariff wars are never good, and in the end they're not good for the consumer because it's the consumer that ends up paying one way or another for tariffs," Hieronimus said in the interview.

Coca-Cola CEO James Quincey

Trump announced increased tariffs on global aluminum imports last month, which are set to take effect on March 12. According to Coca-Cola CEO James Quincey, the company may "put more emphasis" on plastic bottles if aluminum prices rise.

"If one package suffers some increase in input costs, we continue to have other packaging offerings that will allow us to compete in the affordability space," Quincey said on the company's most recent earning call.

Alcoa CEO Bill Oplinger

Bill Oplinger, CEO of Alcoa, a Pittsburgh-based aluminum producer with operations in Canada, said tariffs would hurt companies like his, costing tens of thousands of American jobs.

"This is bad for the aluminum industry in the U.S. It's bad for American workers," Oplinger said at the BMO Global Metals and Mining Conference in Florida. "We’re advocating with the administration to, at a minimum, get a Canadian exemption."

Pfizer CEO Albert Bourla

On Monday, Pfizer CEO Albert Bourla said the company could move some drug manufacturing to the U.S. if tariffs go into effect impacting business. Pfizer's exposure would mainly be to tariffs on European countries, which Trump says are coming soon.

"We have the capabilities here and the manufacturing sites are operating in good capacity right now," Bourla said at the TD Cowen healthcare conference Monday. "If something happens, we will try to mitigate it by transferring from manufacturing sites outside to the manufacturing sites here."

Hasbro CEO Chris Cocks

Toy maker Hasbro is on a path to reducing its reliance on manufacturing in China, with executives saying on a recent earning call that the company will lower the percentage of its toys and games coming out of China down from 50% to 40% in two years.

CEO Chris Cocks said the company's licensing business is growing, adding that "it's relatively inexposed to like some of the tariff drama that's going on right now."

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