Shoppers look for bargains at a Target store in Chicago on November 26, 2024, ahead of the Black Friday shopping day.
The threat of proposed tariffs from the Trump administration has many companies, retail trade groups and industry analysts warning that those moves could fuel higher prices on a wide range of purchases. For example, Walmart CFO John David Rainey told CNBC last month that the retailer could have to raise prices on some items if President-elect Trump's proposed tariffs take effect.
"Our model is everyday low prices. But there probably will be cases where prices will go up for consumers," Rainey told CNBC.
While the specter of increased prices due to Trump tariffs loom, Barkin said one of the things that he is focused on is the changed relationship he believes that consumers have with price increases compared to during the first Trump presidency.
"If you look forward a year or two, and you start imagining cost increases in sectors either because you've got commodity supply constraints or tariffs coming, I think the bar to raising prices is lower than it was five years ago," Barkin said.
Barkin said that in 2018 and 2019 he met with companies and asked if they were going to pass on Trump tariff-driven cost increases to consumers. "I heard a lot of people say things like, 'Well I'll pass it on where I can, but there's just no way I'm going into Home Depot and giving a price increase. They're not going to accept it.'
On a recent earnings call, Lowe's CFO Brandon Sink said tariffs "certainly would add product costs," but added "timing and details remain uncertain at this point."
"I just think the barrier to that is lower than it was then," Barkin told Liesman, adding that "people had such recent experience raising prices, and I think the acceptance level is going to be higher because people have accepted prices."
On Wednesday, Trump announced that Peter Navarro will serve as "Senior Counselor for Trade and Manufacturing" in his next White House term, tasked with helping to "successfully advance and communicate the Trump Manufacturing, Tariff, and Trade Agendas," Trump wrote in a pair of Truth Social posts revealing the pick. Navarro was previously a top trade aide for Trump during his first term and major proponent of tariffs.
Asked by Liesman if he sees tariffs as inflationary, Barkin said that "at its simplest, if you put a tariff on something, you increase the cost of it; if you increase the cost of it that's got to increase at some level some pass through; so it should do something to increase prices."
However, he said:
"Inflation though isn't the same as a price for a particular good going up." Instead he explained: A tariff is an "inflationary pressure," whose impact depends on how consumers businesses Fed all respond them. Overall Barkin noted polling conducted Richmond Fed suggests CFOs businesses significantly more optimistic about growth even though it's still unclear what policies including around tariffs