How Tariffs Have Caused Turmoil in the Retail Industry

Scott Kirwin 
Staff Writer

Since Donald Trump took office in 2025, one of the most critical areas of concern for the economy has been tariffs. Implementing tariffs in aggressive ways has led to an increase in prices, diversification of supply chains for manufacturing, and has overall caused significant distress among retailers in the United States. A tariff is a tax placed on imported goods and is imposed by the government. Since the beginning of the new presidency, tariffs have dramatically increased and have been imposed on countries where many U.S. retailers source their products, one example being China. In 2024, U.S. imports from China totaled $438.9 billion. China was a leading country for U.S. retailers to source their products from. On February 1st of 2025, a 145% tariff was placed on all Chinese exports to America, which created anxiety among retailers, as it had a negative effect on their costs, forcing them to pay much greater prices for their goods. This sudden increase in costs has placed severe strain on the operational budgets of retailers, especially ones that primarily source their products from China. As a result, many retailers have had to raise retail prices to cover their losses due to tariffs and have begun seeking alternative suppliers in different countries. This has disrupted the operation of supply chains and the stability in sourcing in general. 

One way that retailers are attempting to prepare for future tariffs is by diversifying the countries from which they source their products. To reduce the dependence on China, many top retailers have relocated their factories and diversified their supply chains. This strategy is beneficial to retailers, as shifting manufacturing to countries with lower tariffs enables companies to cut costs and stabilize their operations. An example of this is Walmart. In 2023, approximately 60% of Walmart’s imports came China. However, due to the tariffs placed on Chinese goods, Walmart has been diversifying their supply chains. They have begun to work with countries such as Vietnam and Mexico, where goods are subject to lower tariffs. 

An additional way retail stores are preparing for tariffs is to raise prices. One of the most common effects of tariffs has been increased prices from retailers. Due to the increased tariffs on imported products, retail stores are raising prices to compensate for the rising cost. An example of this is, iPhones. China is responsible for 80% of Apple’s production capacity and produces approximately 90% of iPhones. Because of this, analysts estimate that there will be a price increase of at least $350 per iPhone. While this may be necessary to maintain a respectable profit margin, consumers have shown backlash to the potential price increase which will likely lower the demand for upcoming apple products that may see prices of over $1,500 just for an iPhone. 

With recent tariffs being implemented the retail market in America is under pressure. This has led to rising costs for retailers, a disruption in supply chains and an increase in prices for consumers. While retailers are attempting to adapt and adjust to the situation, nothing for the future is certain and tariffs have created economic uncertainty. 

Contact Scott at Scott.Kirwin@student.shu.edu