Best Buy CEO on tariffs’ potential effects on consumers

The consumer electronics giant Best Buy is assessing the potential effects of President Donald Trump’s tariffs on some of the nation’s key trade partners.

Trump’s 25 percent tariffs on Mexico and Canada have been paused temporarily, but a 10 percent tariff on China’s products remains.

As part of the First Tuesday speaker series at the University of Minnesota’s Carlson School of Management, Best Buy chief executive Corie Barry spoke with Chris Farrell, senior economics contributor at MPR News, about how the company is assessing the current environment.

“What we’re trying to do is support the administration’s goals,” Barry said. “So you’re trying to understand, like, what are we really trying to accomplish here, but also to educate on what that means for the American consumer.”

Importers of Chinese goods will pay the 10 percent tariff, rather than the foreign exporters. And Barry cautioned those higher costs will likely translate to higher prices at checkout.

“We’ll work with vendor partners, but at the end of the day, these really do become costs that get passed on to the American consumer,” she said.  “They flow through that entire supply chain, and they become part of the baseline cost.”

Barry said getting vendors to move production away from China and diversify supply chains will take time.

“About 60 percent of our cost of sales flows through China in some way, shape or form. And that’s actually been pretty consistent, even with everything that’s happened over the last five years,” she said.

She noted that Apple has tried to move some of its supply chains into India but it takes a long time to do so, because it’s a complex process. And reshoring production to the United States is not a simple alternative.

“These aren’t supply chains that are easy to build here. And in fact, many companies that have tried to build supply chains here in the U.S. have not been successful because they’re so complex, because of the quantities of labor and technical expertise that you need,” she said. “They’re just really, really difficult to create here.”

Trump has been using tariffs against Mexico, Canada and China partly to combat the illicit flow of fentanyl into the U.S.

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