Major U.S. retailers are feeling the effects of President Donald Trump’s tariff hikes, but many are finding ways to limit the impact on shoppers and profits. Walmart, Home Depot and other companies reported earnings in recent weeks, giving Wall Street a glimpse into how businesses and consumers are adjusting to higher import duties.
Tariff expenses are rising, forcing retailers to adopt creative strategies. Companies have imported goods earlier, diversified sourcing and carefully managed prices to avoid alarming customers or drawing scrutiny from the White House. So far, consumer spending has held up, with sales of discretionary goods like clothing and handbags showing resilience.
Walmart Chief Financial Officer John David Rainey said the company raised prices in some areas but kept or even cut prices elsewhere. “There are certainly areas where we have fully absorbed the impact of higher tariff costs,” Rainey told CNBC. “There are other areas where we’ve had to pass some of those costs along. But when you look across the basket of items, we’re certainly trying to keep prices as low as we can.”
Retail analyst Scot Ciccarelli of Truist noted that while companies have increased prices, it’s “not nearly to the degree that might have been expected in early April” when the tariffs were first announced. Many firms have negotiated with suppliers or diversified sourcing to reduce costs.
Walmart and Tapestry, owner of Coach, both raised full-year sales forecasts. Discretionary items performed well, with Coach’s $695 Kisslock bag selling out minutes after launch. However, lower-income consumers remain more sensitive to price changes. Walmart CEO Doug McMillon said the effect of tariffs on spending “has been somewhat muted” but noted middle- and lower-income households are making more adjustments as costs rise.
Home Depot and Lowe’s saw sales improve through July but remain cautious about broader home improvement trends. Higher mortgage rates have dampened major renovations, though both companies are expanding their business with professional contractors to sustain growth. Lowe’s also announced an $8.8 billion deal to acquire Foundation Building Materials to strengthen its pro business.
Some brands face more serious headwinds. Crocs CEO Andrew Rees described the retail environment as “concerning,” citing weak orders and lower store traffic. The company is cutting back on inventory and even swapping out older styles for fresher ones at its retail partners.
Retailers have also fine-tuned pricing strategies to offset costs. Sharkninja CEO Mark Barrocas said the company raised prices carefully and sometimes rolled back increases. It also reduced discounting and priced new items higher at launch, such as its CryoGlow skincare mask introduced at $349 instead of the initially planned $299.
Despite mitigation efforts, tariffs are still taking a toll. Tapestry expects higher duties to add $160 million in costs next fiscal year. Trump’s tariffs on some countries began in early August, while a delayed increase on China remains under negotiation.
Target acknowledged ongoing trade uncertainty, issuing a wider full-year earnings range. Like Walmart, it benefits from strong brand loyalty and alternative revenue streams. Walmart’s advertising business grew 46% in the most recent quarter, while its marketplace revenue jumped 17% year over year.
For some brands, strong demand allows price hikes with little backlash. Birkenstock CEO Oliver Reichert said the company saw “no pushback or cancellations” after July 1 tariff-related increases. Coach has also steadily raised prices and reduced markdowns, giving it more flexibility to absorb costs.
But not all companies have that leverage. Ciccarelli said smaller or struggling brands face more pressure when vendors are unwilling to absorb added expenses. Target reported slimmer profit margins due to order cancellations, while Crocs is pulling back orders amid demand uncertainty.
While the tariff burden persists, retailers with scale and diversified income streams appear better equipped to handle the economic pressure. For now, U.S. consumer spending remains steady, but companies continue to brace for potential turbulence if trade tensions escalate further.
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