Major home improvement retail chain fears ‘final impact’ of Trump tariffs

Although Lowe’s expects “minimal impact” from inflation and impending U.S. tariffs — at least this year — the home improvement chain is keeping a close eye on Trump administration policy changes and consumer spending.

“We know that there’s a lot of uncertainty out there,” Lowe’s CEO Marvin Ellison told The Charlotte Observer and other local media outlets Wednesday following the company’s quarterly earnings call. “It’s a highly fluid situation that’s rapidly evolving.”

The home improvement store chain did not address inflation or tariffs during its fourth-quarter earnings call or 2025 guidance. But questions to company leaders from financial experts and local media outlets focused on these and another policy topic, immigration.

“We don’t know exactly what the final impact will be,” Ellison said. “But whatever it is, we’re prepared to manage the business and do our best to give our customers value.”

Here are four key areas Lowe’s is closely monitoring:

Trump tariffs

President Donald Trump said Tuesday that U.S. tariffs on imports from Canada and Mexico “will go forward” following a month delay that expires next week. On Feb. 1, Trump signed executive orders imposing 25% tariffs on products from Mexico and Canada, as well as 10% duties on Canadian energy.

Trump also implemented 10% tariffs on Chinese imports and plans to impose “reciprocal tariffs” on other American trading partners, including the European Union.

Lowe’s is already acting on tariffs that have been enacted, Chief Financial Officer Brandon Sink said during questions following the company’s fourth-quarters earnings call.

“Our teams are already activating against the tariffs,” he said. “We’re keeping a close watch on other potential policy changes or announcements that may be coming and prepared to respond.”

Lowe’s receives products from Canada, Mexico, China and other parts of Southeast Asia, like South Korea, Ellison said. Lowe’s diversification of its product country of origin is ongoing, Ellison said. But he did not provide examples of how Lowe’s is diversifying the countries of origin for its products.

Lowe’s broad array of goods could be impacted differently based on the rate of the tariffs, and if the product is manufactured or assembled in a specific country.

“This is such a fluid situation, as a big public company, it’s almost impossible for us to determine what the impact of tariffs will be relative to our financial situation because we don’t know what they are,” Ellison said.

But Ellison said Lowe’s has tools and systems in place with employees focused on managing costs.

“The good news is that we can track this,” he said. “We can track purchases, we can track shipments. We know the amount of volume and units we are projected to do in all these different categories, but there is not one category we’re focused on.”

Expectation this year:

“We are just paying keen attention to (tariffs), and we’ll adjust accordingly based on what actually occurs,” Ellison said. “You’re not going to see a real effect on tariff pricing in 2025.”

Inflation’s impact

Inflation also is shaking consumer confidence. The Conference Board on Tuesday released its consumer confidence index report for February. Consumer confidence dropped 7 points to 98.3, falling for the third straight month.

It’s also the largest monthly decline since August 2021, Stephanie Guichard, senior economist at The Conference Board said in the report.

But Ellison said data show disposable income is rising faster than inflation.

“We think that will persist this year,” Ellison said. “We basically don’t see a material impact to our business relative to inflation.”

Inflation, particularly in lumber and copper, remains a concern, however. Lowe’s is closely monitoring those commodity items.

Expectation this year:

“But overall we feel like the inflation environment will be consistent with last year,” Ellison said.

Immigration policies

Most large U.S. companies are paying “close attention” to immigration policies, as well.

“We are highly engaged with all of our customer segments, and we are going to just be as agile as we can,” Ellison said.

Lowe’s is agile and can manage any political environment or policy changes coming, Ellison said.

Expectation this year:

“Focus on controlling what we can control and being very keenly aware of the marketplace,” Ellison said.

Mortgage rates

Another concern, Ellison said, is homeowners accepting higher mortgage rates. Mortgage rates’ new normal has been in the 6% to 7% range.

“I think at some point, people will come to the realization that this is kind of the new normal,” Ellison said. “We think when that occurs, then you’ll see homeowners who built up all this equity start to tap into that equity to invest in their homes.”

So, for example, homeowners locked into 3%, 30-year fixed mortgage with an average $400,000 in built equity, may decide to use that equity to remodel the kitchen. “That’s the activity that we’re waiting on,” Ellison said.

Expectation this year:

Ellison expressed confidence in the long-term growth of the home improvement market, citing home price appreciation, record home equity and personal income growth.