TipRanks
4 min read
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Home Depot (HD) is charting a different course on tariffs. While competitors like Walmart (WMT) plan to raise prices on tariff-impacted goods, Home Depot aims to maintain steady prices, thanks to its flexible product lines and diversified supply chain. Although the company remains exposed to broader macroeconomic pressures, such as a slowdown in housing development, I believe it’s well-positioned for a strong rebound as conditions stabilize. As outlined in the following sections, this underpins my long-term bullish outlook on the stock.
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Currently, U.S. tariffs on Chinese imports stand at 30%, down from the previous 145% following a temporary 90-day agreement between the U.S. and China, set to expire in early July. Unlike many of its peers, particularly Walmart, Home Depot is less reliant on imports, with over 50% of its products sourced domestically. The company has been actively reducing its dependency on any single country since the early days of the Trump administration.
This strategic positioning could allow Home Depot to gain market share, especially if tariff-driven price disparities widen. While some interpret Home Depot’s decision to hold prices as a form of virtue signaling or political calculation, possibly aimed at avoiding friction with former President Trump, such speculation remains unconfirmed. What is clear, however, is that Home Depot’s lower tariff exposure provides it with a competitive advantage in the current trade environment.
Home Depot remains particularly exposed to pressures in the housing market, as a significant portion of its business comes from professionals such as contractors, builders, and plumbers. On its most recent earnings call, the company acknowledged that elevated interest rates are prompting many homeowners to delay major renovation projects. The broader housing landscape isn’t offering much relief either—30-year mortgage rates remain above 7%, and home sales have slowed to their weakest pace since 2009.
These high rates are creating a “lock-in effect,” where homeowners are reluctant to trade up and give up lower mortgage rates, ultimately reducing housing turnover and shifting demand toward smaller, DIY-style projects.
Despite these headwinds, Home Depot is well-positioned for a rebound when housing activity improves, which many experts expect to occur by 2026. The company’s scale provides it with strong bargaining power to help contain vendor-driven price increases. Additionally, Home Depot is reinforcing its focus on the professional segment, highlighted by its $18.25 billion acquisition of SRS Distribution last year, a strategic move to deepen its footprint in the pro market.
