Tips for retailers in the tariff era
U.S. tariff policy is rapidly changing. The points detailed in this post were accurate at the time of publication.
Inasmuch as they have a rational purpose, the broad-based tariffs on imported goods are supposed to benefit the U.S. manufacturing sector. They’re ostensibly designed to create a more favorable environment for investments in onshore factories, suppliers and labor.
Whether or not those benefits ever materialize is debatable (it certainly hasn’t happened yet, as U.S. manufacturing contracted for a third straight month in May, according to Reuters). What isn’t debatable is the impact the tariffs have already had—and continue to have—on the retail industry.
A wholesale onshoring of retail supply manufacturing was never going to happen overnight, whereas the spike in import duties is immediate. Which means that to keep shelves stocked, retailers are compelled to pay a premium. How much of a premium they must pay is perpetually up in the air, as fluctuating policy positions have made anticipating long-term tariff rates impossible. It's that uncertainty, as much as any individual cost increase, that is negatively impacting retailers’ ability to plan and invest, and consumers’ willingness to spend and shop.
Let’s start with consumers. According to a collection of consumer sentiment metrics assembled by Martech.org in May 2025, 36% of consumers expect to feel the economic squeeze “through the end of 2025 or longer.” Older shoppers are the most pessimistic, with 49% of Baby Boomers expecting to be affected for at least the rest of the year. Only 17% believe tariffs won’t significantly disrupt their shopping behavior. Forty-two percent of consumers are waiting longer before buying non-essential items, and 47% are delaying the purchase of high-ticket items (over $200) until necessary.
When will consumers start seeing the impacts of tariffs? The same Axios report predicts that the effects will begin filtering in during the summer months, when retailers roll through pre-tariff inventory—right before back-to-school shopping season. Higher pass-through prices may not be the most detrimental effect, either: CNBC, among other news outlets, is forecasting product shortages in the lead up to the school year and the holidays. More than half (59%) of respondents to the CNBC Supply Chain Survey (59%) said they are not seeing a restart in orders from importers since the pause on the “Liberation Day” reciprocal tariffs.
This puts retailers in an impossible position, to either present customers with higher prices at the shelf and risk losing them to lower-cost competitors, or let those shelves sit empty. Neither is a recipe for revenue growth.
But hey, the holiday season is approaching, and it always redeems even the most pessimistic retail sector projections, right? We might not be able to count on that this year. Because it typically takes about three months to send an order to a factory, have those goods made and get them ready to ship from Asia to the United States, May is the month that most purchase orders go in for the year-end and Christmas holidays. Actual May numbers aren’t available yet, but goods imports slumped by a record 19.9% to $277.9 billion in April—not an encouraging sign. Another portentous indicator: the Port of Los Angeles has less than 30% of the number of containers it had during the peak of Covid.
Retailers also need to maximize conversions when they can. Globally, almost eight in ten digital shopping carts are abandoned, and that’s before the concept of increased tariffs was introduced. To maximize potential revenue, retailers need a checkout strategy (UX + messaging + retargeting) that addresses tariffs within buyers’ preferred channels. Transparency, personalization and better forecasting will all be valuable tools in retailers’ toolboxes in this season of uncertainty.
THINKINK can help you cut through tariff-induced uncertainty. Contact us for a customized retail industry resiliency plan.