What Retail Brands Can Do To Prepare For Tariff Disruptions

At their core, tariffs are taxes on imports. While they’re designed to protect domestic industries, they often end up raising the cost of doing business—especially for multicategory retailers.

For large retailers with massive supplier networks and pricing power, there may be room to negotiate. But for many small and mid-sized brands, the squeeze is already on. 

According to economists at the Peterson Institute for International Economics, the average U.S. household could face as much as $1,200 in added costs per year due to current tariff policies.

And it’s not just consumers feeling the pinch. Goldman Sachs recently downgraded its 2025 GDP forecast, citing trade policy and inflationary pressures. The Federal Reserve has raised its inflation projections, with Chair Jerome Powell stating that “a good part of it is coming from tariffs.”

In plain terms: tariffs are inflationary. Retailers that rely on imported goods are seeing procurement costs spike before those products even hit shelves. Many are left with a tough decision—raise prices or sacrifice margins. Either path puts pressure on brand loyalty, customer experience, or long-term growth.

How Retails Have Responded so Far

Retail leaders are hardly sitting idle. Some are responding with sourcing agility, others with pricing innovation.

• Target has cut apparel lead times by 20% and diversified sourcing into Central America and Asia beyond China.
• Walmart, with its decades of supply chain experience, has asked Chinese suppliers for price concessions to cushion tariff costs.
• Costco is leveraging strong vendor relationships and buying power to maintain value for members.

This is not a one-size-fits-all problem or solution. Businesses with diversified supply chains, strong data visibility and strategic planning capabilities are best positioned to respond quickly. 

Those who lack data-backed flexibility are facing delays, uncertainty and higher operational costs.

The Effects on Smaller Retail Businesses

For retail businesses, using alternative sourcing partners or material suppliers can be a way to offset the impacts of tariffs. But for smaller brands with fewer resources, the squeeze from tariffs can be felt with much more force. 

Unlike large multinationals, smaller retail brands don’t have the capital or capacity to restructure supply chains overnight. Many are turning to creative pricing strategies—bundling, premium positioning, or value-added services—to maintain margin without alienating price-sensitive customers.

Others are looking to reshore production or find suppliers in tariff-free countries. But that takes time and time is money. In the short term, businesses need tools that can provide visibility into supply chains, streamline operations and help them make informed decisions under pressure.

What Consumers Really Care About

Interestingly, while there’s a growing narrative around buying USA-made goods, actual consumer behavior tells a different story. Only 40% of consumers prioritize U.S.-origin goods and among Gen Z—the fastest-growing consumer segment—that drops to just 19%, reported data firm Numerator.

What matters more to them? Price, convenience and availability. This underscores a critical point: while tariffs may shift costs, they don’t automatically shift demand. Retailers and brands must manage the back-end complexities of trade policy while continuing to meet the front-end expectations of a price-conscious, fast-moving customer base.

When it comes to tariffs, the math is straightforward: when retailers face higher costs to import goods, they must either absorb these costs (reducing profitability) or pass them on to consumers (potentially reducing sales).

That’s the essential challenge to retail brands, but it manifests in many different ways. Here’s a look at some of the core obstacles that may face retailers as they navigate tariff landscapes. 

Rising Costs and Margin Compression

The most immediate impact of tariffs is higher costs on imported goods, materials, or components. For brands already operating on tight margins, this squeeze can feel suffocating. 

While some large retailers may negotiate with suppliers or absorb short-term pain, many smaller or mid-sized brands face tough choices: raise prices, reduce product quality, or accept lower profits. None of these are attractive options.

Pricing Strategy and Consumer Sensitivity

Passing cost increases along to consumers is easier said than done. Price remains a top driver for most shoppers, especially in categories like apparel, home goods and general merchandise. 

With inflation still top of mind for many households, even a small increase in shelf prices can lead to lost sales or decreased brand loyalty. Retailers must walk a fine line—preserving profitability without alienating customers.

Disrupted Supply Chains

Shifting a supply chain away from tariffed regions is a massive undertaking. Finding new suppliers, vetting quality, renegotiating terms and adjusting logistics all take time and money. 

Retailers who built sourcing relationships in China or Mexico over decades can’t replicate that overnight in Vietnam or Honduras. In the meantime, brands may face delays, increased lead times and inventory gaps.

Planning Amid Policy Uncertainty

 Perhaps one of the most frustrating aspects of tariffs is the unpredictability. Trade policy can shift with a headline or election cycle, making long-term planning difficult. 

Retailers are forced to forecast costs and lead times in a volatile policy environment—often with conflicting signals from international partners and government agencies.

Technology and Data Limitations

Responding quickly to tariff changes requires real-time visibility into product costs, supplier performance and inventory levels. 

But many retailers still rely on outdated systems or disconnected spreadsheets. Without the right tools in place, it’s difficult to model scenarios, evaluate supplier alternatives, or align teams across product development, sourcing and finance.

Forward-thinking retailers are developing multi-faceted approaches to the tariff challenge—starting now. 

Here’s a look at some of the strategies retail businesses are considering in order to mitigate the ripple effects of tariffs and their drain on resources. 

1. Supply chain diversification: Moving beyond dependence on a single country for sourcing by developing relationships with suppliers in non-tariffed regions.
2. Product engineering and specification reviews: Collaborating with suppliers to reformulate products using components less affected by tariffs without compromising quality.
3. Scenario planning: Developing contingency plans for various tariff scenarios, with clear triggers for action.
4. Enhanced forecasting: Improving prediction capabilities to better anticipate demand patterns amid price volatility.
5. Strategic pricing: Segmenting product lines to allow for varied pricing approaches, potentially absorbing costs on key value items while passing through increases on premium products.

Building Tariff Resilience with Technology

As tariff complexities become more pronounced, more retail businesses will leverage platforms like product lifecycle management (PLM) systems. 

By providing a single source of truth for product data—including materials, costs, countries of origin and supplier information—PLM enables retailers to:

• Instantly assess which products are affected by specific tariffs
• Model various pricing scenarios to maintain margins
• Quickly identify alternative sourcing options
• Streamline product development to offset cost increases
• Accelerate time-to-market to adapt to changing market conditions

Building resilience isn’t just about surviving the current tariff environment—it’s about creating more adaptive, agile organizations prepared for whatever comes next, whether it’s tariffs, supply chain disruptions or changes in consumer demands. 

And the foundation of that agility is based on having strong data, insights and real-time feedback loops throughout the supply chain. 

Tariffs might feel like a burden, but they’re also forcing a re-evaluation of long-held assumptions. 

Businesses are rethinking supplier networks, investing in technology and streamlining product development cycles. In that sense, this is not just a trade war—it’s a wake-up call.

The fundamental question for retailers isn’t just how to respond to today’s tariffs, but how to build organizations that can adapt quickly to whatever trade policy changes lie ahead. The retail landscape has always rewarded adaptation and the current environment makes this capability more valuable than ever.

How the current tariff landscape will affect retail businesses and industries remains to be seen, but one thing is clear: uncertainty is here to stay, tariffs or not. 

But with the right tools and technology, retail brands can become more adaptive, data-driven and future-ready at every turn. 

Centric PLM™ Software empowers retailers and consumer goods brands to make smarter, faster decisions across the product lifecycle. From sourcing and costing to supply chain visibility and product development, Centric helps businesses navigate complexity—and market-wide changes—with confidence.