Trump's latest global tariffs lack the trade war certainty retailers hoped for

CNBC

2 days ago

President Trump's trade war has already loomed large over the back-to-school and holiday season ordering of retailers. Spring season is next, and it is occurring just as Trump's latest sweeping global tariffs take effect.
While Spring 2026 may seem relatively far off into the future, for retailers, now is the time of year when they plan spring orders, and both retailing and manufacturing experts say the tariffs will influence the level of activity.
The retail industry warned on Friday that the latest tariffs may lead to higher prices, fewer products on the shelves, and job losses.
"Continued high tariffs from key sourcing countries, last-minute policy shifts, and unclear new requirements are creating the perfect storm for a difficult holiday season and a challenging spring," said Steve Lamar, CEO of the American Apparel & Footwear Association. "America's most popular brands and retailers are in a flurry of navigating the still-unpublished details of new trade deals. As they plan for Spring 2026, they're weighing tough choices: whether to raise prices, cut jobs, or reduce the range of products offered to consumers," he said.
The U.S. fashion industry already carries what Lamar called an "outsized share of the burden."
In 2024, it accounted for less than 5% of all imports by value yet accounted for more than 25% of all tariffs the U.S. government collected.
During the summer months, companies are typically in the advanced stages of planning and placing orders for the new year and spring seasons. Now, there's a widespread hesitancy to make timely shipping and sourcing decisions.
"To stay competitive, American companies need clear, final trade terms now; not uncertainty layered on top of already unsustainable costs," Lamar said.
David French, the National Retail Federation's executive vice president of government relations, said in a statement on Friday that "binding trade agreements that truly open markets by lowering tariffs, not raising them," should be the administration's goal.
NRF warned that the "direct result of tariffs will be higher prices, decreased hiring, fewer capital expenditures and slower innovation."
"Retailers have been able to hold the line on pricing so far, but the new tariffs will impact merchandise in the coming weeks. We have heard directly from small retailers who are concerned about their ability to stay in business in the face of these unsustainable tariff rates," French said in the statement.
Aabesh De, founder of plant health company Flora — which shot to popularity after his appearance on Shark Tank — told CNBC that with a product development and manufacturing cycle that is between 6 to 8 months, the tariff uncertainty, and in his company's case the layering of Chinese tariffs, led the Flora team to pause the release of a new Flora Pod.
"Originally, we were hoping for a December release, and we then pushed it back to the Spring," said De. "Now, we are back to the drawing board because we are paying a layered tariff of 60%. That would push the pod from $50 to over $100. It's become a big question mark of where do we source our pieces and existing components."
He is now looking at tariff supply chain scenarios with other countries, such as Vietnam. But he added, "There is no feasible way to make the product here in America in our price range."
Vietnam agreed to a trade deal with the U.S. in early July, which set tariffs at 20%. Talks between the U.S. and China are ongoing, and a 30% tariff is currently in effect, layered on top of other existing tariffs. If no deal is reached, tariffs on Chinese goods could reach as high as 145%. Trump officials have said talks with China will take longer, but progress is being made.
Jon Gold, vice president of supply chain and customs policy at NRF, said that shipments through the first quarter of 2026 "will undoubtedly be impacted by the tariffs as the ongoing uncertainty has challenged retailers and their buying and sourcing decisions."
"Not knowing if certain key suppliers will have new trade deals or frameworks at lower or higher tariff rates has made it incredibly difficult for retailers of all sizes to properly plan and forecast what the next buying and selling season will look like. As a result, consumers may be subject to higher costs as well as less product availability," he said.
Xan Hood, founder and CEO of leather goods company Buffalo Jackson Trading Co., said he is pushing through the fear and uncertainty and ordering for spring with a product cycle for ordering and receiving products that is four to five months.
"When you are under stress, you tend to think short-term," said Hood. "But I need to think like a larger business and place my orders. I may not have the resources like a large business, so I do the best I can. If I seize up in this doom and gloom and don't place my orders, I won't have inventory. It's a risky move, but it's the right decision. I don't want to look back."
Hood said he never thought his company would be embroiled in a trade war since he sources his product in both Mexico and India.
"These two countries should be good partners for the U.S.," Hood said. "We still don't know how it will play out in the end."
The U.S. has extended a pause on additional 25% tariffs on Mexican goods, with Trump citing progress in talks, but India was a somewhat surprising target of higher than expected new tariffs at 25%.
Hood said making the same products in the U.S. would cost four to five times more, based on the estimated 50 man-hours of labor required to make a leather bag.
The trade war hasn't just hit the product economics, but Hood's ability to focus on strategy and growth as a CEO. He said the amount of time he is spending playing out countless scenarios and resolving logistics issues as a result of the tariffs is taking him away from planning ahead. "What used to take 10% of my time as the owner now takes up to 50%," he said. "Time I once spent on new product development, marketing, and strategy now goes to managing tariff-related issues," he added.
With the ongoing uncertainty related to Trump administration policies, the health of the factories in Mexico and India are major concerns. "The global supply chain is a very vulnerable system. Factories depend on orders from multiple companies. If they are not receiving orders, that would lead to closings, which could impact future orders for other companies," Hood said.
Retailers do not want to pause orders, according to retail consultant and former retail industry executive Jan Rogers Kniffen, based on recent conversations he has had. He recently met with roughly sixty apparel, accessories, footwear, and cosmetics retailers and vendors equally split between the East Coast and West Coast. "There were two types of companies I talked to, retailers who did nothing regarding their 'on order' goods, and those who 'paused' goods and regretted that decision," said Kniffen. "There was not one company or person I talked to who said that they were glad that they paused. It was 100% agreed that pausing was too disruptive."
Orders for the fall season are down, but Kniffer said they are probably at 95% of what they would be in an "average" year.
"Retailers are doing what they always do when facing more uncertainty than usual, they buy a little bit less than planned and try to chase if things are strong," Kniffen said. "They are taking the same view on purchases for the spring season, and, I think it is for all of those same reasons. Consumers don't like uncertainty. Retailers don't like uncertainty. So, they express some caution on what they're buying for the next season. They would rather be a bit short and have strong gross margins and chase some goods than get caught with inventories that are too heavy and have to mark it all down to be clean for the following season," he added.
Ordering from China specifically is down and will continue lower, according to Kniffer. "Every retailer who is still in China tells me that they are bringing less out of China than last fall and will be bringing even less out in spring versus the prior year," he said.
But he added that the retailers still view the consumer as being solid and demand as healthy. Back-to-school spending started early and he said it seems "stronger than planned, and much better than last year. And I am not hearing people saying that tariffs will be a drag on profitability," he said. But he conceded, "I am undoubtedly the most optimistic of the analysts on the U.S. vendors and retailers handling tariffs with minimal impact on their top and bottom lines."
Even with the beginning of the August 1 tariffs on many nations, Mike Short, president of global forwarding at logistics company C.H. Robinson, said ongoing trade investigations and court hearings still hang over U.S. companies.
"It's clear that tariff and trade disruptions are far from over," Short said.
Much of that action is outside of retail, though it may add to the layering of tariffs that ultimately work their way into retail supply chains. For example, multiple investigations are active related to Section 232 of U.S. trade law, spanning sectors such as lumber, pharmaceuticals, semiconductors, aerospace, trucks and truck parts, seafood, and critical minerals. "As we saw with copper this week, these investigations can swiftly lead to new tariffs," Short said, referencing the 50% tariff implemented on overseas copper products.
"The reality is that tariff volatility has become the new normal," he said.
In its earnings on Thursday, Amazon flagged "recessionary fears" and "tariff and trade policies" as potential headwinds for the second consecutive quarter. Amazon CEO Andy Jassy said demand and pricing have held steady so far, and Amazon would absorb higher costs if tariffs rise.
Kniffen said that in the end, the strong in retail will get stronger while the weak get weaker. "Walmart, Costco, Home Depot, Dick's Sporting Goods and TJX are the five best retailers in the country, so no matter where I put them on the 'affected by tariffs list,' they will handle it better than other retailers with whom they compete and just take share," he said.
"In retail, winners keep winning, losers keep losing until something changes that or the losers disappear. Tariffs are just a little kerosene on that fire," he added.