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Home Depot to cap foreign sourcing at 10% by 2026

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June 2, 2025
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Home Depot Inc (NYSE: HD) is taking a markedly different approach from many U.S. retailers as new tariff threats loom.

Speaking in a CNBC exclusive interview, CFO Richard McPhail said the home improvement giant is strategically positioned to absorb tariff shocks without raising prices, thanks to a long-term effort to diversify its supply chain and increase domestic sourcing.

“Over the last decade, we’ve had a strategy of diversifying our supply base,” McPhail told CNBC’s Morgan Brennan. “Within 12 months, no single country outside the U.S. will represent more than 10% of the products that we purchase.”

This comes at a time when President Donald Trump’s tariff policies with his announcement to increase tariffs from 25% to 50% for imported steel and aluminium.

While some retailers have signaled potential price hikes to offset the higher costs, Home Depot is choosing a different path.

The company announced during its May 20 earnings report that it has no plans to increase prices in response to tariffs. Instead, it will focus on gaining market share by leveraging its strong supply chain positioning.

“That’s coming gradually,” McPhail said of domestic investment. “We are seeing certain categories migrate back to the U.S., like power tools and luxury vinyl tile. Diversification is just good business.”

Home Depot’s strategic shift to US sourcing

Currently, more than 50% of the products Home Depot sells are sourced domestically. Its decade-long effort to reduce reliance on any single foreign country has proven to be a critical buffer against the uncertainty posed by shifting trade policy.

By proactively rebalancing its sourcing strategy, the company aims to maintain pricing stability and protect margins without passing costs on to consumers.

“We feel like we’re in a great spot,” McPhail said. “And we credit our merchandising team and supplier partners. We want them to win with us, and we’ve done that for over a decade.”

Note that Home Depot stock is currently up 10% versus its recent low.

HD is tapping growth despite market headwinds

The move is also timely, as the U.S. housing market faces a growing affordability crisis.

With housing stock aging – over 50% is more than 40 years old – and demand for new construction outpacing supply, McPhail emphasized the importance of supporting home builders and professional contractors.

Home Depot serves over 9 million professional contractors, who represent about half of the company’s business. But labor shortages remain a major barrier. “Ninety-five percent of our pro customers say they can’t find enough labor,” McPhail noted.

To address this, Home Depot launched its “Path to Pro” initiative, which has trained and placed more than 300,000 workers into construction roles. The company is also calling for reforms in zoning and permitting, and sees immigration policy as another factor in expanding the skilled labor pool.

Amid volatile global trade dynamics and political uncertainty, Home Depot’s supply chain resilience and its decision to hold prices steady may give it a competitive edge – one that the company believes can translate into greater market share in the months ahead.

The post Home Depot to cap foreign sourcing at 10% by 2026 appeared first on Invezz

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