The U.S. retail sector is bracing for potential disruptions in the upcoming holiday shopping season due to the impact of President Donald Trump‘s tariffs on imported goods.
Wells Fargo Report Warns of Retail Shifts Amid Tariffs
A report by Wells Fargo & Co. released on Wednesday suggests that the effects of the tariffs could lead to changes in product availability, prices, and promotional strategies.
The report, titled “2025 Supply Chain Report,” highlights that retailers have been adjusting their strategies since the announcement of tariffs in April. Some have increased their inventory to offset potential tariff costs, while others have reduced orders, focusing on their best-selling items.
Jeremy Jansen, the head of global originations for Wells Fargo Supply Chain Finance, suggested that retailers may cut back on promotions rather than raising list prices. “Expect fewer big-ticket rebates like appliances,” stated Jansen.
Adam Davis, one of the report’s authors and the managing director for Wells Fargo Retail Finance, noted that retailers will need to be strategic in their approach to pricing in the face of increased costs. Davis also pointed out that retailers are streamlining their product offerings to manage costs, a strategy he referred to as “inventory rationalization.”
Higher Prices, Fewer choices, Lesser discounts
The effects of the tariffs are expected to become apparent this fall, with tariff-sensitive goods like apparel, furniture, and holiday décor potentially priced higher or stocked in smaller assortments.
Retailers may roll out promotions as early as September and October to spread demand and prevent stock shortages in December.
Consumers are still expected to chase discounts, though the deals they go after may be more selective than in previous years.
Rising Costs Hit Back-to-School Shopping, Social Security
The impact of Trump’s tariffs is already being felt in the retail sector. A recent report revealed that back-to-school shopping had become 9% more expensive due to the ongoing trade war. The rising costs are also affecting other areas of consumer spending, with school lunch prices increasing by 3% for the 2025-26 school year.
These tariffs have also sparked fears among Social Security recipients, with 63% expressing concerns that inflation could rise above the cost-of-living adjustment, as per a Nationwide Retirement Institute survey.
The impact of these tariffs is also evident in the economy, with U.S. producer prices soaring in July, signaling that the tariff hikes are filtering through the supply chain and impacting consumer store shelves.
Walmart (NYSE:WMT) CEO Doug McMillon warned that Trump's tariffs are pressuring profits, noting some lower- and middle-income families have cut back on discretionary purchases. He said Walmart has absorbed most costs, passing only 4–5% of increases to consumers.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
