Retail CEOs Brace for Rising Costs as New Trump Tariffs Loom

As the dust settles on the 2024 presidential election, retailers are bracing for potential changes that could significantly impact their cost structures. President-elect Donald Trump has promised new tariffs under his upcoming administration, which could have a broad impact on retailers across various sectors. In this article, we will explore the potential implications of these tariffs on retail companies and discuss strategies retailers can employ to mitigate the effects of rising costs.



The Impact of New Trump Tariffs on Retail Cost Structures

President-elect Trump's proposed tariffs include a 10% levy on all imported goods, with products from China facing levies of up to 60% and a 25% tariff on all goods from Mexico and Canada. These tariffs would increase the cost of goods sold for retailers, as they would have to pay higher prices for imported products. For example, a specialty retailer raised prices on a broad set of tens of thousands of stock-keeping units (SKUs) in reaction to an increase in tariffs on goods from China before the COVID-19 pandemic, leading to a negative impact on customer perception and sales (Oliver Wyman, 2025).

Higher tariffs could also disrupt retailers' supply chains, forcing them to find alternative suppliers or rethink their manufacturing processes. This could lead to increased costs due to changes in logistics, inventory management, and potential delays in product delivery. For instance, during the 2018-2019 tariff wars, companies scrambled to adjust to the long-term ramifications of tariffs, leading to a surge in orders and stockpiling of inventory (Supply Chain Dive, 2024).

Retailers may need to pass on higher costs to consumers through price increases. However, small percentage increases can have an outsized impact on customer perception and willingness to buy. For example, a 5% price increase from $0.99 to $1.04 can negatively impact sales (Oliver Wyman, 2025). Retailers should consider an elasticity-based approach to determine which products across their assortment can better withstand an increase and maintain category architectures to encourage the right trade-up and trade-down behavior.

Higher tariffs could lead to a decrease in profit margins for retailers, as they may struggle to pass on the full cost increase to consumers. For instance, a specialty retailer that raised prices on tens of thousands of SKUs in reaction to tariffs on goods from China saw a negative impact on sales, despite the price increase being below 5% of existing prices (Oliver Wyman, 2025).