Just over five months have passed since President Donald Trump’s Apr. 2 declaration of “Liberation Day,” in which he signed an Executive Order declaring a national emergency regarding America’s trade deficit, which Trump asserted gave him the right to level a minimum 10% baseline tariff upon nearly every country that trades with the U.S.
The announcement created economic chaos and led to a near-immediate global market crash, with a number of American retailers warning they would have to increase their prices as a result of the incoming tariffs and potential trade wars.
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Since that time, though, sales have — as Barron’s has reported — held steady. This is due to a number of factors:
- Many retailers rushed to order and receive extra goods before the tariff deadline took effect.
- The legality of Trump’s tariffs has been contested in the U.S. lower court system, and will now be heard by the Supreme Court.
- Trump has paused a number of tariffs against our largest trade partners in order to negotiate better deals.
However, with holiday shopping around the corner, it’s important to gauge how retailers are currently reacting to the state of Trump’s tariffs, and how that could impact your wallet.
General Merchandize-Heavy Retailers Like Best Buy and Target Will Likely Raise Prices
In a discussion with CNBC, former Walmart U.S. CEO Bill Simon noted that general merchandise-heavy retailers like Best Buy and Target “will have a more difficult time managing the [tariff] impact in the short run” as disrupted supply chains and product shortages finally begin to take effect in America.
“They will not be able to absorb the entirety of it. It will take time for them to adjust their sourcing models to mitigate tariff expenses,” he added.
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While Larger-Scale Retailers Like Amazon, Costco and Walmart Will Hold Prices Steady
Simon also predicted that larger retailers such as Amazon, Costco and Walmart will be able to deflect tariff-related price increases in the final two quarters of 2025 “with their large-scale and heavy food [and] consumable business.” He argued these chains will “be able to mitigate, or absorb most or all of the tariff. Meaning, consumers will not notice the impact.”
Some Companies Will Shift Their Product Lines To Adapt to Tariffs
Despite the fact that a retailer like Five Below receives 72% of its products from the highly-tariffed China, it will likely adapt thanks to its broad product diversity. As predicted by Jerry Storch, CEO of Storch Advisors, the discount retailer will most likely have a sales advantage over other stores.
“Best Buy does not have as much flexibility to adjust its assortment,” he stated. “They have to have the TV that you want by brand or size. Abercrombie has to have certain jeans. With Five Below, there’s nothing they need to have. They can change their assortment and be opportunistic on what they purchase.”
How Should You Adapt?
With all of the above in mind, shoppers will be most likely to find more affordable deals at larger-scale retailers that can more easily absorb tariff excesses (like Walmart and Amazon), as well as shops like Five Below, which have the freedom to adjust their merchandise to their financial needs. Meanwhile, stores like Best Buy and Target, which have far less leeway, will be more likely to increase prices to withstand tariff hikes.
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This article originally appeared on GOBankingRates.com: How Retailers Are Reacting to Tariffs: What You Need To Know Before Shopping
