Different retailers will be affected differently, depending on where they source the goods they sell and whether those sources are located in countries where tariffs apply.  As an example, if products come from a country facing a 10% tariff the importer, ultimately the merchant, generally speaking, would be required to pay the 10% tariff to the U.S. government. Many economists have predicted a high likelihood that U.S. consumer spending will decline in the face of tariffs and higher prices. That trend would affect virtually all merchants.

While the impact of tariffs on products depends on the countries from which they are imported, tariffs heavily impact apparel, shoes, autos, steel and aluminum. Those products are mostly imported into the U.S., or they have been singled out for higher tariffs, or they come from Canada or Mexico, which are currently subject to higher tariffs than many other countries.

Retailers and merchants have a few options for reducing the impact of tariffs. They can pass some or all of the cost of tariffs along to consumers. They can seek sources for the products they sell that are in countries with lower tariffs or in the U.S., where tariffs do not apply. They can reduce or stop selling items that bear a high tariff cost.

Retailers and merchants could increase their vigilance when it comes to fraud in the tariff era. Historically, raising new or bigger barriers to fraud has proven costly with more legitimate orders being declined for fear of fraud. Alternatively, they could work with third-party fraud providers that have managed other disruptions, such as the COVID pandemic, that led to an increase in online fraud. Fraud prevention has undergone an innovation evolution, leading the best in class to design AI-powered solutions that instantly sort fraudulent from legitimate orders. The new generation of Innovative fraud solutions can keep up with order surges and with new fraud trends and techniques. The leading providers back their decisions with a financial guarantee that shifts the liability for fraud from merchants to the provider.

Broad-based tariffs lead to higher prices for both life’s necessities and indulgences. As necessities become more expensive, consumers scale back spending on indulgences and ultimately cut back or trade down on necessities. A number of economists have predicted that tariffs will lead to increased inflation and possibly a recession. Economic uncertainty and the potential for severe economic hard times are likely to slow spending even before the full effect of the current tariffs and the added effect of coming tariffs are felt throughout the U.S.

Predicting the long-term effects of tariffs on the retail industry at this point is speculative. Tariffs bring on higher prices for goods, which discourages consumer spending. Retail profits and margins suffer, meaning some retailers will look for ways to cut costs. Those cuts could lead to store closures and layoffs. In the extreme, some retailers may find their businesses are no longer viable and they will disappear from the retail landscape.