Retailers are passing down the cost of tariffs onto consumers, and Americans are starting to become price-fatigued.
Transcript:
Caroline Woods: What is the overall consensus about the impact the tariffs are having from retailers, and are they passing on higher prices onto the consumer yet?
Christine Short: Yeah, I think most of the retailers we’ve tracked have said they’re really trying not to. But Yes, some of those higher prices have trickled in. As we know, the tariff and trade policy picture has changed quite a few times this year. Just last week there was another pause on Chinese tariffs. So a bit of a sigh of relief there. But we’re still seeing Chinese tariffs on imports from China 30% Whereas prior to this year that we didn’t have tariffs of that size. So a lot of these retailers are still contending with those. But again, relieved that they haven’t gone up to some of the, you know, percentages that we’ve heard thrown around 125%, 145%. So we have a pause until November. We’ll see what happens at that point. So it’s still a bit of an uncertain picture for retailers because they’re not sure what happens come November, but they’re trying to prepare as best they can. Like I said, some of these are negotiating with suppliers. They’re trying to move countries of production. They are trying to move away. Target, for example, just in 2017, 60% of their imports were from China, and they’ve gotten that down to 30% And they said, by the end of next year, expect that to be closer to 25% So retailers are trying to as quickly as they can move supply chains. But as you know, it takes time. But many of them have said Yes, this will creep into pricing. And we started to see that.
Caroline Woods: And we’re starting to see consumers a bit fatigued with the increase in prices as well. How strong is the consumer based on what these retailers have been saying?
Christine Short: You know, like I said, it depends which retailer you look at. I think the consumer has been surprisingly resilient in the face of a lot of this. I think the one thing that concerns me the most is the labor market. We know that the consumer will roll with inflation and higher prices. We’ve seen it know, really in the wake of COVID we’ve been dealing with higher cost of items. Right but it’s because for the most part, folks have felt comfortable that they have. They can keep their job if they, you know, needed to get a new job, they’d have the ability to find another job and that their employment is safe over the next 12 months or so. Now that we’re seeing the labor market, farm payrolls a couple of weeks ago for July came out and they were weaker than expected. We had revisions to the June and may numbers. Unemployment is still historically very low at 4.2% but we’re starting to see a few cracks in the jobs picture. And I think that’s where you start to see consumers get a little nervous and hold back a little bit. We are in the back to school shopping season, so we’ve seen retailers talking about that. Consumers are still coming out for that. Maybe not in the record droves that they did last year or even 2022. This is the second largest shopping season outside of the winter holiday season. So they’re still here. But I think they are again looking for value and looking for a bargain.
Subscribe |
Earn. Live. Invest. |
TheStreet Pro |
#consumer #tariff #presidenttrump
source
