Walmart (WMT) warned last week that tariffs would soon force it to raise prices, but Home Depot (HD) is taking the opposite tack.
In an interview with CNBC Tuesday morning, CFO Richard McPhail said the company does not expect to pass new tariff costs on to customers. “Because of our scale, the great partnerships we have with our suppliers and productivity that we continue to drive in our business, we intend to generally maintain our current pricing levels across our portfolio,” he said.
That’s a clear swipe at Walmart, which said it be forced to raise prices in the comping months. The split in strategy comes as companies scramble to respond to President Trump’s shifting trade policies and a temporary deal that dropped tariffs to 30% on Chinese imports and 10% for many other countries. However, depending on the exact import, tariffs may stack up beyond those headline numbers.
Home Depot, which missed Wall Street’s Q1 earnings expectations but beat on revenue, says it’s hedged its exposure by diversifying sourcing. McPhail asserted that more than half the company’s products are U.S.-made and that no single country outside the U.S. will account for more than 10% of purchases by next year.
Still, comparable sales in Q1 declined 0.3% company-wide, with only a 0.2% gain in the U.S., meaning most of the growth came from new store openings and newer business lines, not increased spending. Customers appear to be trading down to smaller jobs, skipping bigger home-reno projects.
While Home Depot says it clawed back momentum in April, its usual spring bump may be masking weak demand and consumer caution. By holding prices steady, it hopes to win goodwill, wooing customers wary of inflation, whatever its underlying cause.
While Home Depot says it intends to hold the line, some of its major suppliers have already indicated price hikes could be coming. Stanley Black & Decker (SWK), which supplies power tools and hardware to Home Depot and other retailers, recently told investors it will raise prices in the second and third quarters, explicitly citing higher import costs tied to Trump’s new tariffs.
Since the temporary China trade deal was struck, Black & Decker’s tariff concerns may be fading somewhat. But the threat still looms.
That creates a squeeze because Home Depot, no matter its sourcing, still doesn’t make the bulk of what it sells. If wholesale prices rise as expected and Home Depot refuses to pass those increases on to customers, the pressure lands squarely on its own margins.
It’s possible the company could further diversify its supply chain or lean harder on its scale to renegotiate terms. For now, Home Depot’s tariff resistance may be more of a strategic posture than any long-term guarantee.
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