Retailers Brace for Tariff Challenges Under Trump

The prospect of new tariffs under President-elect Donald Trump’s administration has sparked widespread concern among US retailers, given the significant financial impact such policies could have on supply chains. During his campaign, Trump proposed sweeping tariffs, including a 20% duty on imports and a severe 60% levy on Chinese goods, aiming to bolster domestic manufacturing.

The retail sector, already grappling with pandemic-induced supply chain disruptions, is bracing for further instability. David French of the National Retail Federation emphasized the industry's readiness, stating, “Our members have been working on contingency plans since President Trump secured the nomination,” in an interview with CNBC.

Major brands like Steve Madden and E.l.f Beauty are proactively adjusting. Steve Madden plans to reduce its reliance on Chinese manufacturing by 45% in the coming year, while E.l.f Beauty aims to expand international sales, currently at 21% of its total revenue, to offset potential losses in the United States, as previously reported by MBN. “We do not like tariffs because they are a tax on the American people”, said E.l.f. CEO Tarang Amin.

Smaller businesses, such as Pastazerts and Nebula Snacks are also preparing for potential disruptions. Pastazerts owner Stephanie Berwick noted challenges in sourcing U.S.-based suppliers for specialized materials like food-grade cardboard for frozen desserts. “We may not get our orders in time if we are competing with big food manufacturers,” she explained. David Jacobowitz of Nebula Snacks shared that his company preemptively ordered packaging in bulk last June to mitigate anticipated cost increases.

Shifting production out of China poses significant challenges for smaller companies. “The impact on small businesses is severe. These are the people really getting hurt”, said Ron Sorini of Sorini, Samet & Associates. The high costs and logistical hurdles of relocating production lines often leave small enterprises particularly vulnerable to the effects of new trade barriers.

Retailers are adopting various strategies, from raising product prices to stockpiling inventory ahead of potential tariffs. Some, like Oaktree Memorials, are taking a more cautious approach. Co-founder Max Lemper-Tabatsky explained, “Our strategy is one of caution and flexibility. Without concrete information, avoiding upfront risks and staying adaptable is the best course.”

As corporate America scrambles to adapt, the full extent of Trump’s tariff proposals remains uncertain. Francisco Cervantes, President, Business Coordinating Council (CCE), sought to reassure stakeholders, suggesting that Trump’s tariff threats were largely campaign rhetoric. However, the CCE also underscored the importance of collaboration between the private sectors of both countries to safeguard the USMCA agreement, which could be jeopardized by unilateral tariff actions.