US-China Trade Tariffs Call For Rethinking On Strategy By US Retailers To Survive

Retail consultants feel that retailers that are looking for ways to hike the cost of their products to offset the tariffs imposed due to US-China trade war have to rethink their strategies as consumers are not likely to accept price rise. Till now consumers have not been affected by negative impact of tariffs on Chinese products by US government. Late this week US govt. announced that retail sales went up in May and sales for last month too were better which shows that shoppers in US have not cut down their expenditure and retail industry continues to be healthy.

Last month when President Trump increased tariffs from 10 % to 25 % on goods worth $200 million from China it affected retailers of home improvement products. Large retailer Restoration Hardware announced that it will increase prices of few of its products to offset the tariff impact. Trump has said that additional tariffs will be imposed on another range of products from China worth $300 billion which would bring nearly all products imported from that country under tariffs. This move could have a strong impact on the apparel industry of US too which till now has not been affected.

Till now retailers in US like Walmart have not allowed the impact of tariffs to touch their customers and some of them have resorted to substitutes. This is possible only with large retailers as they can invest in technology to keep costs with better market capitalization while small ones with poor capitalization and narrow focus would suffer. Several of them are already planning for a leaner holiday season in 2019 due to uncertainty of more tariffs. Mass merchants like Lowe’s BestBuy, Home Depot, Dollar tree and several others say retail analysts have been negatively impacted by the last round of tariffs that has hit the furniture and home improvement industry the most.