You really can’t argue with Joe Feldman, an analyst at Telsey Advisory Group: “We are spending a lot of time on something that continues to change and is rapidly changing. It’s not even worth trying.” Ever-changing, ever-chaotic, ever-devastating, the Trump Tariff Tsunami represents the biggest challenge American businesses have had to deal with certainly since the pandemic but probably stretching back even further to at least the 2008-2009 Great Recession … and maybe longer.
American Giant, the casual apparel supplier that recently landed its T-shirts in Walmart, has been touting its domestic manufacturing with cotton from U.S. farms and telling potential customers this program allows it to be competitive with what is coming out of China, Vietnam and elsewhere in Southeast Asia for some products, especially once the higher tariffs kick in.
Whichever way the tariff situation eventually shakes out, companies are scrambling to try to deal with it in the short term. So, here’s what we know now and what we can reasonably expect. And then some things — small things to be sure — that companies can do (some are already doing) to try to come out of this thing alive on the other side.
First the Purge and then the Surge
When the numbers for April start to be reported we are likely first to see the signs of a surge in sales, especially in big-ticket, high-profile consumer products like automobiles, computers, major appliances and home remodeling goods. Americans understand that the current inventories of these products — wherever they originated from — came into the country before any new tariffs hit and so are priced accordingly (unless retailers are playing a pricing game with the public).
Shoppers are going to want to lay their hands on this stuff knowing there is a finite supply and once it’s gone, the tariff-ticketed products will be all that’s left. So, don’t be surprised to see some pretty decent retail sales numbers — at least initially. And don’t be surprised that a certain person at 1600 Pennsylvania Avenue (at least on weekdays) is likely to point to the positive numbers as a sign that his master plan is working.
Of course, it isn’t going to work. Panic buying is not reflective of long-term economic trends and realists are already predicting the second quarter of this calendar year is likely to show reduced business activity on virtually every scale. All of this surging — even splurging — is going to lead to the inverse of this equation: the purge. As in, the cleaning out of inventory levels across the entire supply chain of both vendors and retailers the likes of which we last saw during the government-subsidized feeding frenzy in the first two years of the pandemic.
If it’s not nailed down (and even if it is), it’s going to be moved out of the dark, dank corners of warehouses and put up for opportunistic sales…just as long as it’s not carrying any tariff duties. As we suggested, some sellers are likely to add those duties to retail price tags regardless, knowing that it will be a seller’s market, at least for a short time. Buyer beware.
And then the Dirge
Just as it did once the pandemic surge died down, the dirge comes next. Consumers who needed to make purchases — or did so thinking they were getting a bargain — will start to get tapped out and things will abruptly shift into reverse. As the tariff headlines continue to rage, consumers will start to get scared to buy anything they really don’t need. And then before too long, the bottom will drop. It will be sudden; it will be quick, and it will be ugly.
In the Meantime
So, before that happens, here are a few things companies and consumers are doing to try to take advantage of whatever is possible to avoid disaster.
- Transshipping, it used to be a dirty word, moving goods from one unacceptable country or supplier to others more agreeable. Right now, pragmatically speaking, there’s no stigma attached to it. Apple shipped 600 tons — TONS! — of iPhones from India to the U.S. to land here before any potential tariffs hit. That’s about 10 million or so devices, and while it’s only an estimated one month’s supply at its current sales rate, that did buy Apple some time – even though we all experienced the tariff blink. Don’t be surprised to see a lot of other companies doing the same thing, albeit on a smaller scale. And if the opportunities exist to rush in goods from other nations that may get hit with tariffs after the 90-day reprieve ends, that’s a viable plan for some importers.
- Itemizing Tariff Costs on Receipts. If you’re already selling goods carrying tariffs, you may start to see consumer receipts and manufacturer invoices with a new line item specifying how much those tariffs have added to the cost of these goods. There’ll be no better way to bring home the point of the added cost than putting it in dollars and common sense. We see retailers and restaurants already adding a line for the extra cost of paying with a credit card, so this is not unprecedented. Hotels have surcharges for resort fees and energy recovery fees. Buyers and consumers are not going to like this, but it will shift some of the blame from your company more rightfully to where it belongs.
- Buy from Europe. With Chinese goods priced out of the market for the time being and Mexican and Canadian merchandise also getting slammed, buying from the EU and elsewhere in Europe represents a good, if potentially short-term, solution. European products have traditionally been more expensive than those from Asia, but in these new tariff times, they may well be cheaper. Don’t be surprised to see more Made in Turkey, Made in Poland and Made in Portugal labels on a wide variety of products.
- Buy American. Yes, that was supposed to be the whole point of these tariffs but in most cases, it’s unrealistic to think products can be made competitively domestically. And even in the cases where it is possible, it will take years — even decades — for a manufacturing base to be built up in this country that will match what currently exists in China and elsewhere in Asia.
Getting Creative
In small corners of some industries, there are alternatives. Furniture supplier Vaughan Bassett has always made the majority of its wood furniture in Virginia, and it recently told the industry on the eve of the biggest trade show of the spring, “We’re risk-free. We’re tariff-free. We have $25 million in finished goods inventory available to ship today. And we ship most orders within three days.”
American Giant, the casual apparel supplier that recently landed its T-shirts in Walmart, has been touting its domestic manufacturing with cotton from U.S. farms and telling potential customers this program allows it to be competitive with what is coming out of China, Vietnam and elsewhere in Southeast Asia for some products, especially once the higher tariffs kick in.
A decorative accessories company, Evergreen Enterprises, recently set up shop near its Virginia headquarters to make some of the products it previously imported. The prices don’t match China but if these higher tariffs stick, they will be competitive.
The Dallas Market Center, which houses wholesale shows for the apparel, western, footwear and gift and home décor sectors, recently launched Nearshoring America, an event that connects U.S. retailers and importers with export-ready factories in Mexico and Central and South America. Even with new tariffs impacting Mexico, goods from there and elsewhere in Latin America where there are no new tariffs are still a reasonable alternative to Asia, especially with shorter lead and shipping times. Several additional shows are scheduled starting in January 2026.
Rock and a Harder Place
No doubt other companies are finding innovative solutions to help get them through this dangerous period. But it is a treacherous time for companies, particularly smaller ones that don’t have the lobbying muscle or high profiles of sectors like automotive and tech. The real challenge is planning, forecasting and rightsizing a business when the goalposts keep moving. Look for products that can absorb some higher retail price tags and search out importers that may be sitting on excessive pre-tariff inventories and need to move them to raise cash to stay in business.
Interviewed by the New York Times Dealbook, Danny Muskat, an owner and the SVP at Deer Stags, a family-owned footwear company based in New York, summed it up for many tariff-impacted companies. “We have some planned cost receipts of about $1 million due to ship in the next few weeks. When those were bought, the duty we budgeted for was $60,000. With the new tariffs, we’ll need to pay $1,510,000 for those goods to clear customs. That’s simply not possible for us to pay. This trade war of Trump’s is a game of chicken being ‘negotiated’ with a gun to the head of all the American businesses like mine.” And that gun is locked and loaded.
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.
If you are not yet a BRA Retail Member, you can easily opt in to either Regular (no cost) or Distinguished ($100/yr.) Membership via this super simple join form