Tariffs “R” US: Now What?

New U.S. tariffs are in place for goods from major trading partners China, Canada and Mexico,  which means such levies are no longer a policy debate; they are a high-stakes reality, notes a recent report from management consultant Bain & Co.

“This shift from globalization to protectionist policy creates new complexities for retailers, such as rising costs and harsher consequences for missteps in forecasting or strategy,” report Bain Partners Kris Grichel, Aaron Cheris and Ryan Fisher and Practice Director Stephanie Koszyk.

In general terms, retailers in home goods and apparel likely face the most gross-margin pressure due to their heavy exposure to foreign products. “It will be especially critical for apparel players to negotiate pass-through costs, given their heavy reliance on imported goods from intermediaries,” the report notes.

Revenue, meantime, will likely hit unevenly across sectors, with such discretionary items as home and general merchandise seeing volumes fall as consumers react to higher prices. Grocery may fare better than other categories, but isn’t immune—especially high-end players, which may face meaningful pressure from consumers trading down.

“Beyond P&L statements, balance sheets will be under strain, with working capital and inventory turnover becoming critical stress points,” the report notes.

Given all that uncertainty, what’s the best path forward for retailers? “Leaders are acting decisively on immediate priorities while building long-term resilience” is paramount, the Bain consultants say.

Click here for more from the report.