The trade war team’s tricky questions for retailers: raising prices or eating costs?

Vivian Hoffman worked in retail for half a century, including 25 years of Century 21 buyers, and the last eight runs, a chain that sells affordable women’s clothing in the suburbs of New York City. She adapted to the recession, the turmoil following the September 11, 2001 attacks and the 19009 pandemic.

But recent weeks have raised a series of challenges, even for industry veterans.

Most of the clothing and accessories Ms. Hoffman sells are made in China and currently faces import tariffs of 145%, and Vietnam, which may face high tariffs within a few months. Although her suppliers paid tariffs, one of them recently raised the price of shoes by 20%, while others said they would soon increase their prices to offset higher costs. Suppliers selling Chinese-made jeans can’t even figure out what prices to invest in their fall products.

The turmoil above the wavering consumer demand has put Ms. Hoffman in trouble.

“I’m going to go back and forth: I’ll buy less because I think the business will be hurt, or are I trying to buy extra items because I’m worried about the price going up?” she said. “I kept walking back and forth between the two extremes.”

WHIM has five stores and a small number of online businesses, just a spot in the retail universe. But the tricky decision Ms. Hoffman faces is a microcosm of the whiplash that American retailers are facing. All businesses are eager for clarity, but the wide range of tariffs imposed, threatened and withdrawn by the White House makes it difficult for companies of all sizes and shapes to plan ahead.

Large retailers like Walmart and Target and giant e-commerce operators have the right to offer offers to their overseas suppliers. Amazon CEO Andy Jassy said in an interview on CNBC on Thursday that the company has accelerated its move to the U.S. and is trying to “renegotiate terms” with some suppliers.

However, most retailers are small independent businesses, often at the mercy of suppliers. In many industries (such as clothing), most of them are sold are produced in China and other countries, with few options in the United States.

Alyssa Chambers, who owns Nova Essence IO, made the scented candles, said the price of 12-pack of glass candles made in China jumped to $25 from $21 last year. But the cost of producing similar jars in the United States is at least twice as much, she said. Even before this week’s event, she also ordered wax and Wick from China to rise.

“Currently, I’m doing extra fees for these supplies because I just don’t want the customers to be affected,” Ms. Chambers said. “I’m just taking the time to sacrifice rather than an emotional response.”

The starting nature of the tariffs introduced also shocked the stock market and weakened consumer confidence as people fell into trouble. Retail sales rose 0.2% in February compared to January, despite a drop in spending on clothing and accessories, electronics, and restaurants and bars.

The University of Michigan’s consumer sentiment index fell 11% in March, the third consecutive decline to its lowest level since November 2022. Anxiety over rising prices may convince consumers to buy more second-hand clothing and other goods on the secondary market, and the company recently investigated consumers’ surveys of the products they returned. Nearly 85% expressed concern that tariffs would raise prices.

“The impact on tariffs and their impact on consumer retail sales could be worse than inflation,” said David Silverman, senior director of the group at Fitch Ratings, a company, lowered its rating for “deterioration” of “neutrality” this week.

Anna Wong, Bloomberg, said the latest tariffs on China could be excessively harmful to consumer goods.

The Peterson Institute of Peterson Institute said last year, three-quarters of all toys and sporting goods, 40% of all footwear, and 25% of all textiles and clothing imported into the United States came from China.

For months, many companies have been trying to adjust their business plans in the hope of obtaining tariffs and have achieved different successes. Shoemaker Steve Madden said in February that since November it will reduce the percentage of goods imported from China from 71 to 58. The company hopes to reduce that number to the 40S range in the coming months.

“We will selectively raise prices,” the company’s CEO Edward Rosenfeld told investors in February. “In the places we think we can get more for the goods, we will start in the fall.”

Walmart, the country’s largest retailer, rose 3 to 4% in its first-quarter sales during an investor meeting this week. But as one-third of Walmart’s sales come from around the world, especially China and Mexico, tariffs make it more difficult to predict operating income growth.

“We’re entering this new tariff environment and we’re still working hard,” said John David Rainey, chief financial officer of Walmart. “In the current quarter, uncertainty and decline in consumer sentiment have caused greater weekly sales volatility, and frankly, every day.”

According to a supplier that canceled orders, a few days after the first tariff announcement, Amazon canceled orders for certain items it purchased from suppliers through special plans.

Under the special plan, the supplier sold its products to Amazon for a lower price, but Amazon Pay moved the products to the U.S. and hung up paying for the tariffs directly. Amazon effectively pushes more costs back to suppliers by canceling orders when tariff risks change. Now, suppliers have to import their own products, pay tariffs, and then try to renegotiate higher wholesale prices with Amazon.

Amazon declined to comment on canceled orders, which Bloomberg reported earlier.

Production retailer Hobby Lobby told suppliers it is delaying its departure from China due to the escalating trade war and a “rapidly changing and unpredictable landscape” and although the order has not been cancelled, it was dated Thursday and was regarded by the New York Times. It says it will review its plans weekly. Hobby Hall did not comment immediately.

Smaller retailers, no matter how much they are ready, don’t have the muscle or flexibility of Amazon. Bogg founder Kim Vaccarella sells handbags and accessories, and all her suppliers are expected to be in China for tariffs on China. So in January, she visited Sri Lanka and Vietnam to find suppliers to help her company quarantine.

She and her team received samples from Vietnamese manufacturers and were ready to place an order. But after the White House imposed more than 40% of Vietnamese imports, Ms. Vaccarella delayed the order until she could measure the impact.

“We feel like we’re in a good place,” she said, with the White House announcing tariffs in dozens of countries last week. “Like, oh my god, we did all this work, spent all this money, nothing.”

Vietnam’s tariffs have been suspended for three months, but chaos remains. Ms Vaccarella said her company has recently raised the price by $5 on certain products, but has increased the price due to respect for customers. For now, see what happened before taking this step again.

“Every day, you can ask me the same question, it’s a different answer, it’s crazy and uncertainty,” she said.