How are major US retailers reacting to proposed tariffs? How will consumers be affected?

"We exclusively talked about this topic of tariffs," Balika Sonthalia, a partner and practice leader of strategic operations, Americas, at global strategy and management consultancy firm Kearney, told USA TODAY.

In addition to immigration policies, tariffs have retailers worried that “the combination of the two can put a lot of sectors in between a rock and a hard place,” she said. And with Trump repeatedly vowing tariffs are coming – and doubling down this week after the Washington Post reported he might scale them back – U.S. retailers and consumers aren’t waiting to prepare.

Retailers are trying to learn “what exactly they are walking into,” said Sonthalia, whose specialty for Kearney is consumer products and retail and distribution clients. 

'Another form of inflation, just spelled differently'

The proposed tariffs could cost consumers an additional $2,500 to $7,600 a year per household, according to estimates, said Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation.  

Consumers ultimately will pay for any tariffs that are put in place, said Darpan Seth, CEO of Nextuple, which helps build and support programs to help its clients get products for consumers in stores or online. The firm's client list includes major U.S. retailers like Dick's Sporting Goods and luxury brands such as Kate Spade and Coach.

“For consumers, tariffs are like another form of inflation, just spelled differently,” Seth said. “They have the same effect of rising prices.” 

Some consumers are going to delay major purchases or make smaller repairs if prices go up for imported goods from certain countries, he said. For example, a consumer “may want to do a quick fix instead of trying to change the carburetor in your car,” Seth said. 

Retailers dealing with tariffs will have no choice in the short term but to increase prices, Seth said. 

US retailers are worried about tariffs

Gold and other industry sources say even though the Trump administration threatened tariffs on imports during president-elect's first administration – and followed through on some – things are different this time.  

There’s a lot of concern among retailers represented by the National Retail Federation, which includes both large and small businesses, Gold said. 

“There’s so much complexity in the supply chain and so many challenges in the supply chain as it is, to have something as big as these massive tariffs, is really causing disruption in itself and folks trying to figure out ‘What am I supposed to do?'" Gold said.

Since there are several different scenarios of tariffs being discussed, retailers are trying to come up with plans to address them all, he said.

There are threats of a universal baseline tariff of 10% to 20% on everyone and everything, Gold said. There is also a China-specific tariff, which is 60% to 100%, he said. There are also new threats to 25% tariff on Canada and Mexico and 10% on China over immigration and fentanyl, Gold said.

How will tariffs impact consumers?  

A study from the retail federation looked at the estimated impacts of the tariffs on six consumer product categories: apparel, toys, furniture, household appliances, footwear and travel goods. 

Retailers rely heavily on imported products and manufacturing components to offer customers a variety of products, Gold said.  A tariff is a tax paid by the U.S. importer, not by a foreign country or the exporter, he added.

The retail federation said while some U.S. manufacturers could benefit from the tariffs, the gains to U.S. producers and the Treasury from tariff revenue do not outweigh overall losses to consumers. 

According to the retail federation, some examples of potential price increases with tariffs include: 

• A $40 toaster oven would cost consumers $48 to $52.
• A $50 pair of athletic shoes would cost $59 to $64.
• A $2,000 mattress and box spring set would end up costing $2,128 to $2,190.  

Higher prices and loss of spending power would hit low-income families especially hard, the retail federation said in its study, released on Nov. 4. 

Gold said while the retail federation looked at six specific categories, he also believes pricing for consumer electronics, pet products, children’s products and groceries, could be hit hard by the proposed tariffs. 

Still, there's some optimism. Financial advisors previously told USA TODAY Trump's tariffs during his first term didn't cause "significantly high inflation." And the president-elect's administration remains steadfast on the benefits of tariffs.

“President Trump has promised tariff policies that protect working Americans from the unfair practices of foreign companies and foreign markets," said Brian Hughes, Trump-Vance transition spokesman. "As he did in his first term, he will implement economic and trade policies to make life affordable and more prosperous for our nation, while simultaneously leveling the playing field for American manufacturers.”

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