Chipotle CEO shares how restaurant chain will handle Trump tariff costs

LOS ANGELES - With President Donald Trump’s tariffs taking effect on Canada and Mexico, Chipotle’s CEO has detailed what the restaurant chain plans to do to offset the costs. 

Chipotle CEO Scott Boatwright gave a recent interview with "NBC Nightly News" said the company planned to "absorb" the tariffs. 

FILE - Chipotle restaurant workers fill orders for customers on April 27, 2015 in Miami, Florida. (Photo by Joe Raedle/Getty Images)

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CEO: Chipotle will absorb tariff-related cost increases

What we know:

Trump’s long-threatened tariffs against Canada and Mexico officially went into effect on Tuesday, with imports now being taxed at 25%. Canadian energy products are subject to 10% import duties.

Separately, the 10% tariff that Trump placed on Chinese imports in February also doubled to 20%, and Beijing retaliated Tuesday with tariffs of up to 15% on a wide array of U.S. farm exports. It also expanded the number of U.S. companies subject to export controls and other restrictions by about two dozen.

What they're saying:

"It is our intent as we sit here today to absorb those costs," Boatwright said in an interview that aired on March 2 with "NBC Nightly News," before the tariffs officially went into effect. 

However, if costs become a "significant headwind," that could change, Boatwright added.

Dig deeper:

Chipotle’s CEO said during an earnings call earlier this month that the company sources 2% of its ingredients from Mexico, which includes avocados, tomatoes, limes and peppers, and less than 0.5% of its ingredients from Canada and China. Boatwright previously told analysts during the call that if the tariffs went into effect, "it would have an ongoing impact of about 60 basis points on our cost of sales."

The backstory:

Trump initially suspended the levy on Mexican and Canadian imports in January for one month after Canada promised to implement a $1.3-billion border plan and appoint a fentanyl czar, while Mexican President Claudia Sheinbaum agreed to supply 10,000 troops on the border separating the U.S. and Mexico.

Shortly after Trump's re-election, the White House said that he is working "to hold Mexico, Canada, and China accountable to their promises of halting illegal immigration and stopping poisonous fentanyl and other drugs from flowing into our country."

The other side:

Opponents argue that the cost of the tariffs would just be passed on to American consumers. Over the past several months, several retailers have raised concerns about the prospect of tariffs pumping up the costs of their products or even forcing them to cut back on inventory.