Tariffs Are Paused—But the Clock Is Ticking
After a period of relative calm on the trade front, tariffs are again reshaping the retail landscape. In April 2025, President Trump met privately with executives from Walmart, Home Depot, and Target to discuss his proposed "reciprocal" tariffs—a move not listed on the president’s public schedule, which signaled escalated trade tensions and sparked swift reactions from retailers across the country (NBC News, April 2025).
Just weeks later, the U.S. and China announced a temporary 90-day pause on these same tariffs following extensive negotiations in Geneva. Under this agreement, U.S. tariffs on Chinese imports dropped from 145% to 30%, while China cut its tariffs on U.S. goods from 125% to 10% (NY Post, May 2025). The deal holds until August 10, 2025, buying the market some time, but offering little peace of mind.
For retailers, this development adds yet another layer of complexity to the equation. Even as consumers, still worn down by years of inflation, continue prioritizing low prices and high value, the window for proactive planning remains narrow.
Retail’s New Equation: Cost, Consumer, and Chaos
Retailers and suppliers are facing a perfect storm of volatility:
- The costs of imported goods are rising, particularly in tariff-heavy home improvement categories like kitchen, bath, and interior design (Forbes, April 2025)
- Price-sensitive consumer behavior is accelerating, even in essential categories (Sales Factory Consumer Pulse 146, May 2025)
- Unpredictable policy changes are skewing forecasts as they relate to the accuracy of inventory, pricing, and promotional decisions (Bloomberg, April 2025)
This trio of pressures demands real-time decision-making and operational agility, especially with tariff revisions expected as early as mid-August.
Consumers Are Changing Where They Shop
In Sales Factory’s May 2025 Consumer Pulse, we shared that value-seeking behavior is already shaping retail traffic patterns:
- 42% of consumers have changed where they buy groceries, with discount grocers (47%) and Walmart (40%) seeing the largest increases.
- 36% have adjusted their destination for everyday essentials, where discount/dollar stores (+50%) dominate.
- In durable goods, 26% report shopping differently, often favoring Walmart (41%), outlet stores (40%), or Amazon (45%).
Notably, Target is now seeing declining traffic in essentials, with 35% of shoppers choosing to buy goods elsewhere. Home improvement stores are also dealing with 39% of their consumers pulling back on bigger-ticket purchases. Both of these shifts signal that price perception and channel convenience will be key factors defining Q3.
Promotions Must Reflect the New Reality
Tariff-induced cost pressures make strategic promotional planning more critical and complex than ever. In Powering Up Promotions Through Proactive Planning, we touched on how brands should consider shifting from last-minute promotions to long-term, retailer-aligned planning. Now is the perfect time for brands to:
- Align promotional strategies with retailer category roles
- Build flexible pricing models that anticipate cost swings
- Plan promotions 9 to 12 months out, not 90 days
Retailers like Home Depot and Lowe’s may double down on volume-based promotions targeting pros, where unit margin compression can be offset by bulk sales.
Pro Tip: Use the 90-day pause to prepare, not postpone. Even if costs temporarily stabilize, the longer-term environment remains uncertain.
Private Brands Give Retailers Leverage
As brands absorb tariff costs, private labels give retailers more control over pricing, sourcing, and margin protection. In The Role of Private Branding in Home Improvement, Sales Factory shared that:
- Nearly 70% of consumers say they’ve turned to private brands when national ones become too expensive
- Just 6% disagreed with the statement that private brands offer good value
- Retailers gain category control and shopper loyalty through private offerings
Expect retailers to further lean into private labels, especially in essential and mid-tier home improvement categories where brand loyalty is lower but price sensitivity is high.
Operational Agility Is a Competitive Advantage
The current trade environment is creating a ripple across planning, purchasing, and project timelines, and the temporary pause gives suppliers a narrow window to prepare. But it’s also a reminder: uncertainty is the new normal.
As reported in Forbes, remodelers and contractors are already advising clients to lock in purchases early, sometimes including price flexibility clauses in contracts to reflect tariff-driven pricing increases. Product categories with high import exposure, like appliances, lighting, and plumbing, are anticipating the quickest price hikes. With some suppliers issuing price adjustments with less than a week’s notice, the traditional 90-day planning window is being replaced by rolling, reactive planning cycles.
Experts interviewed in the same article suggest that “stagflation-like” conditions may emerge if tariff-related costs make their way into material and transportation pricing, creating a prolonged challenge rather than a sharp shock.
Final Takeaway: Retailers Who Prepare During the Pause Will Win After It
Between now and August 10, retailers and suppliers have a strategic opportunity to shore up supply chains, rework promotions, and fine-tune pricing strategies based on evolving consumer behavior.
Walmart, Amazon, and discount stores are gaining traction, while higher-priced players and big-box home improvement stores are seeing reduced traffic. In response, smart retailers are leaning into private brand development, early buy programs, flexible promotions, and digital communication that reinforces value.
The most successful brands won’t be the fastest reactors, but the best planners. Those who use the 90-day window to review real-time consumer insights, rather than act on hair-trigger ones, will be positioned to remain flexible, strategic, and responsive as they work to turn disruption into long-term growth.