The impacts of the Trump Administration’s new tariffs are already rippling through global supply chains and consumer markets.
"US retailers should be dusting off their inflation playbooks and brace for erratic shifts in spending patterns," warned our analyst Blake Droesch.
Tariffs are creating uncertainty for retailers across the globe, forcing them to reconsider pricing strategies, supply chains, and competitive positioning in an increasingly complex trade environment.
Tariffs will have an immediate impact on consumer behavior. Lower-income shoppers are expected to shift spending patterns as soon as price increases hit essential categories.
"Consumers are feeling nervous and adopting a wait-and-see approach as tariff-related news unfolds daily," said our analyst Suzy Davidkhanian. This hesitation mirrors consumer behavior during the post-pandemic inflation period.
The University of Michigan’s Index of Consumer Sentiment marked three months of continued decline at the end of March. While some consumers may weather price increases—particularly if employment figures remain strong—overall consumer sentiment is deteriorating, making shoppers "less willing or able to splurge on discretionary goods," according to our analyst Zak Stambor.
“US President Donald Trump’s tariffs will reshape more than a trillion dollars in trade between the world’s largest economy and Latin America, with key partners like Mexico and Brazil at the center of the discussion,” said our analyst Matteo Ceurvels.
US-based brands selling in Latin America may see a significant competitive disadvantage compared to companies from countries. “These changes will force US-based brands to navigate a web of rising costs, supply chain disruptions, and growing competition from local, Asian, and European players,” Ceurvels said.
US companies selling in Latin America should adjust pricing strategies, reevaluate supply chains, and reinforce brand value to retain customer loyalty despite price pressures, Ceurvels said.
North of the border, Canadian retailers face their own set of challenges and opportunities.
"For retailers in Canada, the necessity is to develop new buy channels and sell channels with domestic partners, as well as with countries with stable trade agreements," said our analyst Paul Briggs. “This would avoid import tariffs and capitalize on the growing 'Buy Canadian' sentiment that is sweeping the country.”
As retailers navigate this challenging landscape, one thing remains clear: those who can offer consumers lower costs will win—but achieving this goal has become more difficult.
The winners in this environment will be retailers who can:
For retailers, navigating this environment requires retailers to understand cost structures at the category level and to evaluate their supply chains.
Successful retailers will protect margins "without constant price hikes that could alienate customers," Davidkhanian said. “The winners will be those who minimize disruption while recognizing that consumer sentiment remains fragile,” Davidkhanian said.
"The reality is all retailers need to brace for a tough road ahead," Droesch said.
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