USA and China trade war. US of America and chinese flags crashed containers on sky at sunset background. 3d illustration
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Just as retailers were beginning to adapt to Trump’s 30% tariffs on imported goods from China by shifting supply chains to more favorable countries and frontloading orders before tariffs hit, the President threw another monkey wrench into the works by announcing a 100% across-the-board tariff to take effect on November 1. On Friday, the news sparked the stock market’s steepest decline since April’s “Declaration of Economic Independence” tariff announcement.
Then on Sunday, he tried to calm the markets down by posting on Truth Social, “Don’t worry about China, it will all be fine!” And the market responded, with Reuters reporting that Monday stock futures on the Dow and Nasdaq were up over 400 points and the S&P 500 gained nearly 90 points.
While Chinese imports account for around 17% of goods sold here and imports from China declined 27% in September from previous year, key consumer goods segments, such as apparel, toys, home furnishings and consumer electronics, remain more highly exposed to Chinese sourcing. The magnitude of a potential 100% tariff will be a tough pill for American retailers and consumers to swallow.
Hopes Rise Then Fall
Even as Abercrombie & Fitch, Levi Strauss, Kroger, TJX, and Walmart recently raised guidance, the threat of a 100% tariff potentially coming so quickly leaves no time to make necessary adjustments. A September KPMG survey among 300 C-suite executive leaders found fewer than one-fourth are fully confident in the stability of U.S. tariff levels and 43% reported needing seven to 12 months to pivot supply chains if tariffs increase or new tariffs are introduced.
In Walmart’s latest earnings call, CEO Doug McMillon said that so far the impact of tariffs has been “gradual enough that any behavioral adjustments by the customer have been somewhat muted.”
However, that’s likely to change if the new sweeping tariffs go through. Walmart, the nation’s largest retailer, imported approximately 60% of its products from China in 2023, according to Reuters, though it has been ratcheting down its reliance on imports since then. And Amazon, number two, is reported to depend on China for up to 70% of its goods, based on Wedbush Securities estimates.
Uncertainty Rises
The threat of 100% tariffs on China clouds an already cloudy picture for retailers. Holiday is still in the crosshairs and the National Retail Federation has delayed reporting its forecast until November 6, the last time its done so since the pandemic.
Consumer confidence is also ebbing, as reported by The Conference Board, leading with a headline of a “sharp deterioration in consumers’ views of the current economic situation.”
Stephanie Guichard, TCB’s senior economist said, “Consumer confidence weakened in September, declining to the lowest level since April 2025,” coinciding with Trump’s first tariff announcement, and she cited tariffs, inflation, jobs and employment as weighing heavily on consumer sentiment.
Back in April, Trump was threatening 145% China tariffs until a deal was settled in May to set the rate at 30%. Hearing 100% tariff now is almost as bad, especially as inflation reached nearly 3% in August. The government shutdown is delaying the September report until the end of this month.
Ahead of the latest announcement, KPMG’s September “Tariff Pulse Survey” found that 35% of businesses reported a decline in sales and 31% reported customers were deferring sales.
Margins are also taking a hit, with 39% reporting gross margin declines and 44% expecting the decline to continue into next year, even as 66% have passed through up to half of tariff costs to consumers.
The uncertainty around tariffs has caused 57% of businesses to postpone major new investments. Nearly 40% have paused hiring, while 29% have reduced their workforce up to 5% and 15% have cut between 6% and 10% of their workforce.
Retail has been particularly hard hit by job cuts, reports outplacement firm Challenger, Gray and Christmas. Through the first five months of the year, retailers have eliminated 76,000 jobs, a stunning 274% increase over the previous year.
Prospects for holiday hiring looks equally grim, with retailers expecting to add fewer than 500,000 seasonal employees, following a 4% decline last year to 543,000 seasonal hires.
“A wave of uncertainty is impacting not just retailers, but also consumers heading into the final quarter of the year. With hiring slowing across the board, retailers may hire fewer workers themselves, while many of their shoppers slow spending,” the company said in a statement.
Dismal Retail Prospects
While retailers have been shoring up their supply chains and building resiliency into their planning models, the 100% tariff announcement may be more than they can handle, as BCG managing director and partner Manoj Kothiyal wrote, “Tariffs move faster than supply chains.”
Calling tariffs the new inflation, he warns that traditional models assume predictable and incremental price changes. The latest tariff threat upends that, favoring retailers that have maintained customer trust even as prices have risen. Communicating with transparency and empathy is key.
“When costs rise, explain it plainly – ‘We’re maintaining the same quality and sourcing standards despite global trade change,’” he advised and added, “Transparency builds price trust, which is fast becoming as valuable as brand equity itself.”
Kothiyal warned, “The new reality is ongoing volatility.” Trump’s latest announcement surely proves it.
“Tariffs will be adjusted, renegotiated and expanded in waves. Your goal isn’t to predict the next change – it’s to be ready for all of them,” he concluded. “Tariffs and inflation are rewriting the rules of pricing, perception and loyalty. You can’t control them – but you can control your response to them.”
That, I fear, is easier said than done, given the looming threat of 100% tariffs on Chinese goods ready to hit on November 1.
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Source: https://www.forbes.com/sites/pamdanziger/2025/10/13/trumps-new-100-china-tariff-throws-another-spanner-into-retailers-plans/
