Breakingviews: Ducking tariffs is only half of US firms’ battle

Home Depot says it won’t bring the hammer down on customers. They might take a nasty hit all the same. The $375 billion home-improvement retailer led by Ted Decker is the latest to maintain its guesstimate of where full-year financial results will end up, as it plans to keep prices stable despite the cost-increasing effects of tariffs. While CEOs might be able to lessen their own impact, warning signs of an impending consumer slowdown are flashing.

Home Depot executives stressed on Tuesday that over 50% of its inventory is already sourced in the United States, adding that it has an opportunity to nab market share if others can’t hold the pricing line. That offered enough confidence to maintain its forecasts, much like entertainment giant Walt Disney, which boss Bob Iger said isn’t experiencing any drop-off in bookings at its pricey theme parks or its broader financial outlook. Elsewhere, Amazon.com boss Andy Jassy said the technology giant is “maniacally focused” on restraining prices.

Present optimism is no guarantee of future discipline, though. Walmart CEO Doug McMillon warned last week that the largest U.S. retailer might jack up prices due to trade levies. That changes an earlier tune, when the company similarly trotted out the opportunity to gain share.

It’s easy to see why executives are eager to stand pat. From doughnuts to coffee and burgers, signs of a consumer pullback are already showing. Java slinger Starbucks reported that U.S. sales for stores open at least 13 months declined 2% year-over-year in the quarter ending March 30. McDonald’s and Krispy Kreme noted similar declines.

Glumness is widespread. The University of Michigan’s consumer sentiment survey recorded its lowest level since mid-2022 in May. Americans’ perception of their current financial situation is getting bleaker, and many expect it to get worse, according to the Federal Reserve Bank of New York.

Similarly, transactions for air travel and hotels fell sharply in April, according to credit card data compiled by Bank of America. That weakness showed up in commentary from booking portal Expedia, room-share platform Airbnb and hotel chain Hilton Worldwide.

Investor attention, for now, is on the immediate threat of tariffs. If consumers are weakening, the ability to hold prices or live up to rosier forecasts really is an important fillip. Yet Walmart’s experience shows how quickly reality can skewer CEOs’ plans. Worse, while investors might cheer savvy management, a more sustained and general downturn will inevitably affect everyone. Avoiding President Donald Trump’s ire over passing through costs is only half the battle.