Home Depot, Lowe's quietly raising prices due to tariffs

If a company buys goods from a country that's on President Donald Trump's tariffs list, it has to pay those tariffs. That means it has a choice to make.

It can eat the tariff and take a lower margin (or even a loss) when it sells the item, or it can pass the increase on to customers. Many companies, however, have opted to split the baby and absorb some of the tariff-related increase while also passing some of it on.

Both Lowe's and Home Depot have admitted during their most recent earnings calls that they will be impacted by tariffs. They have also noted that tariffs have caused price increases, but they have made every effort to draw attention away from that.

Lowe's CEO Marvin Ellison talked about pricing during his chain's first-quarter earnings call.

“I think for us, as always, we're gonna take a portfolio approach to pricing. You know, we're pleased that we've built best-in-class tools for price management that's gonna help us navigate any environment, and we have great elasticity data across products and geographies. I think the key for us is the merchants have been cultivating and developing wonderful relationships with suppliers for the last six years. And this is when those relationships start to pay off.”

That's a lot of words to talk around the fact, which the company shared, that about 20% of its goods come from China. Those items will cost more, and some of that will be passed on to customers.

Home Depot has admitted to modest price increases.

Image source: Morris/Bloomberg via Getty Images

Home Depot will raise prices

It seems like companies that have raised prices also have to talk about all the areas where prices did not go up. Home Depot executives followed that script during their second-quarter call.

“But listen, I’d say a couple of things on pricing going back to our call in May. First, it’s super important to remember that over 50% of our products are sourced domestically and wouldn’t be subject to any tariffs,” Home Depot Merchandising Executive Vice President Billy Bastick said.

He then acknowledged that prices would be going up.

“Now some of the important goods, obviously tariff rates are significantly higher today than they were when we spoke in May. So as you’d expect, there’ll be some modest price movement in some categories, but it won’t be broad based,” he shared.

Lowe's has raised prices, too

Both Lowe's and Home Depot have used each other as shields for price increases. Because both have raised prices in certain areas, they can use terms like “price competitive,” that mean “higher prices, but in line with what their rival is charging.”

“I think the key point for us is that we're gonna be really price competitive in the home improvement channel like we always are. We're not in the habit of donating market share to the competition,” Ellison said.

CFO Bill Boltz, however, shared the reality that some items will simply cost more.

“And you can understand where some of those categories fall, you know, a lot of holiday trim and tree ceiling fans, small appliances, tools, etcetera. Make up that 20%,” he shared.

More Retail Stocks:

Boltz also noted that the company has continued to work on alternatives.

“We've been working really hard over the last four or five years to diversify just as everybody has and, you know, partnering closely with both private and national brand suppliers to find different sourcing locations and working to do that,” he added.

Home Depot price increases:

Modest price hikes expected: Home Depot recently confirmed that due to elevated tariffs they anticipate some modest price increases in specific product categories, but emphasized these won’t be broad-based.
Tariff impacts balanced by supply-chain strategies: Over half of Home Depot’s inventory is sourced domestically, and the company has actively diversified its supply chain to reduce pressure on retailers and consumers.
Signs of rising per-transaction spending: A reported 1.4% increase in comparable average ticket growth in recent quarters suggests that price changes, along with fewer promotions, may be nudging up per-transaction totals.

Lowe’s price increases:

Avoiding broad price hikes: Lowe’s has stated it remains committed to staying price-competitive, but hasn’t ruled out price hikes on more items later in the year if tariff-related costs become too burdensome.
Supply chain diversification is a buffer: Like Home Depot, about 60% of Lowe’s sourcing is domestic, with 20% coming from China. The company is focusing on supply-chain diversification to mitigate impacts, positioning itself to selectively raise more prices only if necessary.

U.S. tariffs on imports from China

Section 301 tariffs: Under a longstanding Section 301 investigation by the USTR into China’s trade practices, the U.S. has imposed 25% tariffs on categories such as solar panels, semiconductors, medical supplies, and various industrial goods. Effective January 1, 2025, tariffs on solar wafers and polysilicon were raised to 50%, and certain tungsten products to 25%, according to the United States Trade Representative.
U.S. Customs and Border Protection granted exemptions for electronic goods —such as smartphones, PCs, and servers — primarily benefiting companies like Apple, Nvidia, and Dell. This lowered effective tariffs from nearly 145% down to approximately 20% in those specific categories.

Tariffs have been a bit of a moving target, as negotiations are ongoing with many countries.

Economists, however, largely agree that companies such as Lowe's and Home Depot will have to pass on some tariff-related price hikes.

“Virtually all economists think that the impact of the tariffs will be very bad for America and for the world,” said Joseph Stiglitz, an economics professor at Columbia University and a winner of the Nobel Memorial Prize in Economic Sciences. “They will almost surely be inflationary.”

Other see the damage as being worse than price increases.

“The impact of imposing these tariffs will have the effect of depressing U.S. economic growth, contributing to a higher rate of inflation, and those effects will be worse if the other countries retaliate in kind,” Marcus Noland, executive vice president of the Peterson Institute for International Economics, told TCF.org.