U.S. President Donald Trump's threat of additional 100% tariffs on Chinese imports has sounded alarm bells among retail and trade experts, who caution it could lead to more price increases and squeeze demand.
The fresh levies, set to take effect November 1, would come as shoppers and retailers enter the holiday shopping season - a period that typically accounts for a major chunk of annual retail sales - and dampen consumer sentiment, particularly among lower-income households.
The tariff threat could prompt a "pull-forward of shipments" as retailers try to beat implementation timelines, said Blake Harden, managing director at Washington Council EY.
But he cautioned that accelerated imports might still be hit by duties upon arrival, leading some firms to delay orders or hold shipments in China.
"This will have ripple effects throughout the supply chain," Harden said.
The trade spat this year between the U.S. and key trading partners has clouded the economy, weighed on forecasts for this fiscal year and stoked uncertainty for American consumers and companies alike.
Prices for everything from clothes to TVs have gone up in recent months as manufacturers and retailers struggle with the ever-changing tariff environment while also trying to offset rising commodity and supply-chain costs.
"This will add another layer of anxiety to an already anxious retail sector. Retailers have shown they can manage tariffs, but what's far harder to manage is volatility in tariff rates," CFRA analyst Arun Sundaram said.
"The good news is most holiday inventory is already in the U.S., so this latest escalation shouldn't disrupt the crucial shopping season. However, we could see prices increase next year if this escalation continues."
Retail stocks, including Abercrombie (ANF.N), Best Buy and Nike (NKE.N), fell on Friday after Trump's remarks. But on Sunday, Trump posted on the Truth Social network: "Don't worry about China, it will all be fine! Highly respected President Xi just had a bad moment."
So far this year, retailers have issued mixed outlooks ahead of the holiday season. Target and Best Buy maintained their annual forecasts, while Walmart and Macy's raised theirs. Toymaker Mattel, however, reduced its expectations.
"A lot of companies were expecting this. The surprise is in the timing this close to holiday season," said Ram Reddy, chief technology officer and head of retail, life sciences & enterprise solutions of Nagarro, a global digital engineering and consulting firm.
"I feel the holiday season this year would be a good test of the diversification strategies that companies have tried to do over the last six months."
