Blog

Tariffs & trade developments—week of 4/30

This blog looks at retailer responses to managing tariff uncertainty and price increases.

Written by

May 2, 2025

How retailers are managing tariff uncertainty

In recent months, the most consistent response from retailers has been building in as much flexibility as possible into inventory procurement, supply chains, and contracts to allow them to quickly adjust to shifting tariff policy. Many US retailers, including Amazon, have increased inventory levels in anticipation of tariffs and believe this will help maintain lower prices in the immediate future.

Mono-brand retailers that own both their retail storefronts and production are shifting manufacturing out of China to markets like Vietnam, India and Mexico for US-bound products, while retailers such as Primark, known for its low-cost apparel, have hinted at slowing US store expansion plans and investments while tariff policy unfolds.

Retailer expectations of US pricing impacts

Leading US retailers remain publicly committed to minimizing the pass-through of tariff-related costs. Walmart stated that it intends to keep prices lower than rivals and may use this as an opportunity to “play offense" and invest in price. In its Q1 earnings, Amazon said it had “not seen the average selling price of retail items appreciably go up yet” though the retailer was cautious about making long-term predictions about price. Albertsons published a letter to suppliers, saying “with few exceptions, we are not accepting cost increases due to tariffs” and that suppliers were not permitted to include tariff-related costs in invoices without prior authorization.

Outside of leading grocers and marketplaces, the impact may be more significant. Popular Chinese-based retailers, Temu and Shein, have begun to add tariff surcharges to invoices that can dramatically increase the total purchase price, an idea that low-cost store Amazon Haul also considered but decided against. Some retailers that ship internationally to the US market have paused US orders altogether, while smaller retailers in categories like baby and toys are “seeing a significant – and potentially devastating – impact on cost”. Although macro-economic indicators have not yet shown major deterioration, beauty retailer Sephora reported softer demand in the beauty category, potentially attributed to “less positive economic cycles and uncertainties”.

International impact begins to show

Outside of the US market, retailers are preparing for a wide range of scenarios. The US tariffs have heavily disrupted Chinese manufacturers, causing many businesses to divert additional inventory towards Europe. UK-based retailers Curry’s and WHSmith are both bracing for deflation in some categories as higher supply of Chinese-manufactured products require price cuts to remain competitive.

For grocers, for whom the majority of their assortment is often produced and sold in the local market, the impact is less severe but still requires attention. Canadian retailers like Metro have had to navigate retaliatory tariffs affecting US manufacturers, in some cases finding alternative local suppliers that aren’t subject to tariffs. In Australia, leading retailer, Coles, reported that the impact is still “too early to tell” but they predict increases to costs, such as in meat processing.

How brands can be prepared

After one month of tariff developments, the effects on the global supply chain have just begun. The existing inventory that most retailers and brands had in the US prior to the April 2 implementation of tariffs means that most consumers are not yet seeing tariff-impacted products on store shelves or retailer websites, but that is likely around the corner. In this moment, it is critical that brands be prepared to respond quickly to the shifting landscape.