On Feb. 1, President Donald Trump announced he would implement a 25% additional tariff on all goods imported into the U.S. from Canada and Mexico, a 10% tariff on China, and a 10% levy, which was just announced a few weeks ago.
If followed through on and no more extensions are made, these tariffs are set to go into effect on Tuesday.
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Many companies are concerned about the negative financial repercussions the potential implementation of these tariffs could have on their businesses since some are highly dependent on imported goods from these select countries.
Related: Popular restaurant chain makes major move to beef up business
To mitigate the damages, some companies have been strategizing and reorganizing their businesses in preparation for the Trump tariffs since before knowing he would win the presidential election to soften or prevent the potential blow they might have on their finances.
An employee prepares food at a Chipotle Mexican Grill restaurant.
Chipotle addresses price changes only days before the Trump tariffs go into effect
Although many market sectors may soon raise prices, Chipotle (CMG) lovers should be in the clear, making a price increase for their burrito fix one less thing they have to worry about.
Chipotle CEO Scott Boatwright eased consumers’ concerns by stating that the company is not worried about the effects these tariffs might have on its main ingredients despite the potential cost increase.
“It is our intent as we sit here today to absorb those costs,” said Chipotle CEO Scott Boatwright in an interview.
Related: Major restaurant chain isn’t worried about Mexican avocados
Because the future of the U.S. economy is ever-evolving and the current price increases due to tariffs could be temporary, Chipotle claims it will keep costs constant for consumers as of now.
“We are fortunate to have such an extraordinary economic model at Chipotle that we can withstand those types of inflationary pressures and not have to pass those costs off to the consumer,” said Boatwright. “And that’s our intent this year. Let’s hold pricing constant because we don’t know if the tariffs are transitory, if they’re going to be permanent, and how sticky they’ll be in the new administration,” he added.
Although his words might sound hopeful for some concerned consumers, Boatwright didn’t discard the idea of price changes in the future if costs continue elevating to a point where maintaining the same prices becomes unsustainable.
How Chipotle is changing its supply chain to absorb costs
In terms of its supply chain, Chipotle gets 50% of its avocados from Mexico, and the second half is sourced from other Latin American countries, including Colombia, Peru, and the Dominican Republic.
Although that might seem like a pretty large percentage, only 2% of Chipotle’s total sales come from Mexican imports, including avocados, tomatoes, limes, and peppers. And less than 0.5% come from Canada and China.
This past December, Chipotle raised its menu prices by 2% due to inflation and price surges in its main ingredients so it could increase its portion sizes after the company received backlash from customers.
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Nonetheless, Chipotle’s budgeting and timely price increase might prevent the company from being affected by the Trump tariffs, at least for the rest of 2025, since it has more financial room to expense the potential tariffs.
“If the recently announced tariffs go into full effect, it would have an ongoing impact of about 60 basis points on our cost of sales. Also, we remain confident that we can offset the 60-basis-point portion investment we made in 2024. Recently, we have started to see the impact eased slightly as we expected,” said Chipotle CFO Adam Rymer in an earnings call.
However, as confident as the company may sound in its commitment to absorbing costs, this doesn’t eliminate the potential for its menu prices to increase again in 2026.
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