Dive Brief:
- The Home Depot’s previous experience with trade duties and current sourcing strategy will protect it against any potential tariff hikes under the incoming Trump administration, executives said on a Nov. 12 earnings call.
- The home improvement retailer sources more than half of its goods from North America, according to Chair, President and CEO Ted Decker. The company also sources from China, India, Vietnam and parts of Europe, per its most recent annual report.
- Although any new tariffs, particularly on China-made goods, would still have an impact on Home Depot, according to Decker, the CEO expressed confidence in the company’s ability to address any issues in “a differentiated manner” than its competitors.
Dive Insight:
Home Depot's supply chain team has adjusted in response to tariffs before.
During President-elect Donald Trump’s first presidency, the home improvement retailer said it took a data-driven approach to analyzing tariff impact at the SKU-level, allowing it to dramatically decrease costs related to such duties.
“We know down to the SKU level the point of origin, the classification of the tariff, the potential impact. And from there we start working with our supplier partners to mitigate that tariff impact,” Decker, then acting as EVP of merchandising, said on a Q3 2019 earnings call.
Trump consistently called for higher tariffs on goods imported to the U.S. during his second bid for re-election, with particularly lofty rates proposed for China-made products. Such increases would compound tariffs that were finalized by the Biden administration in September.
Home Depot expects to circumvent some China-related tariff costs because of the makeup of its sourcing footprint. Although the company does source some goods from the country, the company’s procurement operations are more heavily concentrated in North America, Decker and other executives reiterated to analysts on the Nov. 12 earnings call.
As an example, the home improvement retailer sources nearly 80% of its lumber from North America, according to its 2023 environment, social and governance report.
