Higher tariffs on China threatens Best Buy
Increased tariffs impact Minnesota businesses
A 50% increase in tariffs marks a dramatic escalation in the trade war between the U.S. and China.
RICHFIELD, Minn. (FOX 9) - President Trump has announced plans to raise tariffs on China to 104% - an escalation that poses serious business challenges to Richfield-based Best Buy.
President Trump to hike tariffs on China
The backstory:
President Trump on Monday announced plans to raise tariffs on China to 104% beginning on Wednesday.
The 50% increase marks a dramatic escalation in the trade war between the U.S. and China.
Trump has already imposed 20% tariffs on China in February for fentanyl trafficking. He then announced a separate 34% tariff on the country last week.
Why it matters:
Best Buy relies on China for nearly 60% of the products it sells. Even before the announcement of new tariffs, Best Buy’s stock price dropped sharply in the first week of April, falling by nearly 19% in a three-day span.
Concerns over tariffs
What they're saying:
In its annual report to federal regulators filed on Feb. 1, Best Buy executives expressed concerns that higher tariffs, saying they, "could have a material adverse impact on our business."
In the report, the company said new tariffs "could increase costs, disrupt our supply chain and/or impact the availability of underlying technology critical to our operations."
During an earnings call a month later, executives again raised the issue of tariffs, mentioning the word more than two dozen times.
Corie Barry, the CEO, said new tariffs would make price hikes "highly likely."
The company did not immediately respond to a request for comment on Tuesday.
Expert: Higher tariffs likely mean higher prices, threat of layoffs
Expert opinion:
"Best Buy might not be able to pass along all of this to consumers, and so they might reduce some of their margins or some of their profits and that results in lower shareholder values – i.e., their stock goes down – or they might have to lay people off," said Tyler Schipper, an economist at the University of St. Thomas. "The bottom line is that if you’re going into a Best Buy, and they’ve imported these products after Wednesday, they’re going to be more expensive."
What's next:
The new tariffs on China take effect at midnight on Wednesday.