President Trump’s recent decision to impose tariffs on steel and aluminum produced outside the U.S. has come under fire from many sources — not least members of his own political party. The National Retail Federation called them a “self-inflicted wound on the economy” and a “tax on American families.” While some pundits see ideological and economic benefits to the move, most mainstream economists believe the risk of a trade war far outweighs any benefits the tariffs could generate.
The Retail TouchPoints team weighs in on this fraught, fast-moving topic, with advice on how retailers can prepare for potential volatility in what’s currently a growing economy.
Debbie Hauss, Editor in Chief: I often try my best to see both sides of politically charged topics, but I admit it’s been difficult lately. That said, I get the argument that certain foreign entities have strengthened their trade power while our steel towns have suffered. But in examining all the arguments and counter-arguments here, it’s hard to justify the plan to impose tariffs around the world. It definitely feels like a trade war threat that will end badly for America’s retail industry as well as the middle class. In the meantime, the President has backed off tariffs on Canada and Mexico and is considering requests from other countries, so what will be the end game?
Adam Blair, Executive Editor: Any kind of government action with regard to the economy is going to create winners and losers, but it’s really hard to see who the winners are in this case. Like the rest of the president’s arguably unintelligible “America First” policies, the imposition of tariffs seems designed for an economic landscape that is already far in the past. Tariffs can help fledgling industries develop by protecting them from foreign competitors, but well-established industries should be able to find ways to compete on the world stage without risking a trade war. If Trump’s actions do set off such a war, the losers will far outnumber the winners. Either retailers will need to absorb higher costs for imported goods, shrinking their profit margins, or they will need to pass along price increases to consumers. Neither outcome is likely to help the overall economy. I applaud the NRF and other groups standing against the tariffs, and am relieved that the Trump administration is already carving out exceptions — notably for two of our biggest trading partners, Canada and Mexico.
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Marie Griffin, Managing Editor: The consensus of analysts is that the tariff increases will have limited impact on most retailers in the short term. The bigger concern is retaliation on the part of trading partners, which could raise the prices of all sorts of goods in the longer term. But the biggest threat is the drama and instability that emanates from the White House almost daily. So, turn away from that and use the “new normal” of uncertainty — and whatever benefits your organization is getting from the tax cuts — to quickly invest in the changes you know you need to make. Invest in technology that provides customers with a seamless experience with your brand across all channels, powers a transparent and efficient end-to-end supply chain, equips in-store personnel with the mobile tools they need to give customers more personalized service, and gives your company access to the last mile to the consumer’s home.
Glenn Taylor, Senior Editor: The steel and aluminum tariffs will have at least some impact on the end consumer, especially if disposable income is hit. Matt Priest, President and CEO of the Footwear Distributors & Retailers of America, noted in an interview with Footwear News that the footwear industry has tariffs as high as 68% on certain products, and a result, merchandise prices have skyrocketed, job growth has slowed and more people are priced out. This may be an extreme example, but it illustrates the basics of what can happen any time imports drastically change in price. At least in the short term, the good news is that Canada’s and Mexico’s exemptions leave two of our largest trading partners in the same spot that they were before.
Klaudia Tirico, Features Editor: While I understand the impact that these steel and aluminum tariffs will have on American businesses and people, I can’t help but think that there are other, more important issues going on in our country that take precedence to worrying about canned goods and kitchen appliances going up in price. Call me naive. There are thousands of high school kids protesting today to end gun violence, so something like this is not top-of-mind for me as an American citizen. That’s my opinion and I’m sticking to it. In terms of what retailers should do in the wake of these tariffs, I’m siding with Marie on this one. Take what you have from the tax cuts and what you know your customers want and need from you, and do you best to invest in enhancing the experience for them. If your consumers have to pay more for certain goods in the long term, offer an exceptional experience for them to soften the burden. I look forward to seeing how all of this plays out in the future.
