The $8+ trillion retail industry is the backbone of the American economy and like all industries, success in retail relies on the presence of orderly strategies and planning disciplines. It’s difficult enough to accommodate the ever-changing landscape of consumer preferences and the recurrent disruptive effects of war, weather, pandemics, etc., but now add chaos and confusion to the challenges at hand based on the whims of a mercurial president.
The damages that this “plan” has caused in just the last few days has not reared its actual head in stores yet. Explosive price increases, interruptions in service, delayed supply lines caused by U.S. Customs facilities ill-prepared to efficiently process tariffed shipments, widespread product shortages, plus an increasingly likely recession with a typical rise in unemployment and all manner of financial hardships all await us.
It must be pointed out that this president was reelected in 2024 with the slimmest of margins, hardly the mandate he and his supporters claim. It must also be pointed out that, historically, almost every one of this president’s business ventures throughout his entire career has failed. The notable exception was his role in the entirely fictionalized “Apprentice” reality show. Here’s the real reality check: Donald Trump’s actual lack of business acumen must be considered in light of the bomb he has just planted underneath the entire world’s marketplaces and trading platforms.
The Tariff Effect
The president’s long-standing beliefs regarding tariffs are viewed by economists and historians as incompatible with past precedence and current realities. Historical precedence is in light of the abject failures of the 1930 Smoot Hawley Tariffs; the current reality is Trump’s notion of bringing widespread product production back to the U.S. Both are seen by most, if not all in the retail and manufacturing business as completely unrealistic.
So now, the Kraken has been unleashed. Unfettered by a remarkably complicit Republican Party and an extraordinarily wealthy donor class lusting for the renewal of the 2017 tax cuts, Trump moved with lightning speed to impose so-called reciprocal tariffs on almost every country on the planet using a “so-called” formula-driven schedule that most experts say defies logic or reason. The backdrop of this “plan” is that all of America’s trading partners will take note and promptly comply. But, surprise, surprise, surprise, the rest of the world is in full retaliatory mode and not showing any signs of capitulation or much of any accommodation.
Retail Fallout
The damages that this “plan” has caused in just the last few days has not reared its actual head in stores yet. Explosive price increases, interruptions in service and supply lines caused by U.S. Customs facilities ill-prepared to efficiently process tariffed shipments, widespread production disruptions and product shortages, plus an increasingly likely recession with a typical rise in unemployment and all manner of financial hardships – all await us.
So, how can retailers and manufacturers, who almost all are led by logic-bound and organized leaders, react and respond in the face of a worldwide trading crisis that has suddenly been thrust upon them? Rise up and speak out against this false “Father Knows Best” Trump narrative despite the ever-present likelihood of some form of retribution. Well, they must. Whether individually or, in concert as an industry, voices must be heard in opposition to this “plan.”
Tariff Action Plan
What to do? How to proceed — today, tomorrow, next season and next year? Well, despite over 50 years of experience in retailing and worldwide manufacturing, I have no bromides. I have never faced as ridiculous a set of circumstances as what Trump has just wrought (nor has anyone else that I know). Nevertheless, here are some suggestions:
- First, be careful trying to “game” what is going on now, or what may go on in the near or longer term. There is a pronounced lack of rhyme or reason to much of what Trump does. On April 7 Trump’s full suite of retaliatory tariffs were turned on. Then, out of the blue, two days later, he abruptly created a 90-day moratorium on retaliatory tariffs for all countries except China. This was, allegedly to allow for negotiations and “deals” to be struck. In reality, however, this decision, appears to have been triggered by a fear of a sudden collapse of the U.S. Bond Market.
- Second, get in touch with all overseas, yet to be shipped merchandise commitments; merchandise whether finished or in production that you are you legally committed to taking possession of. Can you renegotiate costs, if only to share the risk with partners? Raising retail prices will almost certainly mute demand and cause future orders to be affected. Much care must be used here, however. In my own experience, overseas vendors will sometimes accommodate requests for price concessions, if only to avoid merchandise or production cancellations. But then they will either raise prices on future orders or reduce features, benefits and/or quality in the future to recoup their losses. Next, rather than move deliveries forward, I would hold shipments of some non-seasonal merchandise back as a hedge of sorts against what may happen with regard to actual tariffs over the next several months.
- Third, resist the temptation to presume where this is all headed. The president doesn’t know where this is going. Yes, there are long-standing issues of American trade inequities, but they will never be solved in the way. This grand “vision” of restoring U.S. manufacturing to some past historical level is delusional. Only you can accurately determine whether reshoring, all or in part, is possible. Needless to say, this crisis calls for highly flexible and conservatized sales forecasts, inventory and expense planning. The actual reactionary U.S. tariff position looks like it may continue to change on an almost daily basis for the foreseeable future despite the administration’s claim that they are following a preset plan.
- Fourth, be sure that you are adequately prepared financially to pay tariffs before being able to command higher prices for your merchandise to cover those tariffs. The sudden imposition of substantial tariffs will require a prompt reset of cash flow consumption schedules to avoid any possible liquidity crises.
- Fifth, customers usually notice price increases immediately when they occur and almost always direct their displeasure at the stores and brands with whom they do business — as if to say the retailers are somehow to blame. I think that all tariff-driven price increases that take place should be clearly noted as such on all merchandise ticketing, signage and marketing. This is to counter the ongoing and ridiculous false narrative that countries not consumers pay tariffs.
The Collective Pushback
The good news, if there is any, is that a drumbeat of public unease and outright criticism from some Republicans and high-profile financial players may very well cause Trump to walk back the trade war he just started. It will certainly help if the rest of the world, specifically China, Japan, The EU and The UK fight back. Optimistically, maybe the republican party will man up, regain their constitutional right to control tariffs, and rein Trump in. And then just maybe the next 3-½ years will pass without any more of this kind of unwarranted chaos.
The bad news, unfortunately, is that the breach of trust and faith that Trump is responsible for may not be repaired anytime soon. The consumer space has always been fraught with uncertainty and disruption although this latest artificial and unwarranted calamity is one for the ages. Customers and the businesses they rely on, are still alive if not entirely well, and hopefully we will be able to navigate these trying times.
About The Robin Report
The Robin Report provides insights and opinion on major topics in the retail apparel and related consumer product industries. It delivers provocative, unbiased analysis on retail, brands and consumer products, and covers industry-wide issues, trends and consumer behavior throughout the retail-related industries. TRR is delivered exclusively on TheRobinReport.com. Additionally, TRR produces executive briefings and industry events.
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