US Shoppers Feel the Heat of Trump's Trade War
As temperatures soared on a sweltering July day in New York City, shoppers at Queens’s largest mall expressed their concerns about rising prices.
“T-shirts, basic t-shirts, underwear, the basic necessities – the prices are going up,” said Clarence Johnson, 48, who was visiting Macy’s at the Queen Center mall to pick up shirts he ordered online.
As Donald Trump continues his trade wars, retailers are passing on price increases to customers. Department stores, particularly reliant on imported goods and materials, have been scrambling to manage fluctuating prices.
At Macy’s, signs advertising sales of up to 60% off original prices were visible throughout the store, even near the diamond-encrusted necklaces locked inside display cases in the jewelry department. However, for some customers, prices remain uncomfortably high.
Nydia Olvera, 61, noted that shopping at Macy’s is typically beyond her budget, yet she visits to check the clearance section. “I remember they used to have these t-shirts for three dollars. Now, no more,” she remarked. “Now I pay $7 to $9 for a t-shirt.”
A recent study from analytics firm DataWeave revealed that prices for footwear, apparel, and bags have significantly increased from January to June, with footwear rising by as much as 4% and apparel by nearly 2% over the past six months.
The potential for further price hikes looms large. The White House is engaged in negotiations with numerous countries that could face new tariffs as high as 40%, set to take effect on August 1, following a delayed deadline from July 9.
Last week, the Trump administration announced a deal with Vietnam, the second-largest manufacturer for apparel, footwear, and accessories after China. According to the deal, exports from Vietnam will incur 20% tariffs, significantly lower than the proposed 46% announced earlier this year. However, goods made in other countries, such as China, that are shipped from Vietnam will still face a hefty 40% tariff.
Retail executives have indicated that while this new deal is preferable to the initial tariffs, it will still contribute to higher costs for retailers. Macy’s recently revised its earnings forecast due to tariff uncertainties, and its stock price has dropped 25% this year.
Macy’s CEO Tony Spring mentioned in May that while some prices will remain stable, others will increase, requiring the company to pass on some costs to customers. Other executives from major retailers like Nike, Target, Best Buy, and Walmart echoed similar sentiments regarding cost absorption.
Despite the challenges, retailers like Macy’s are also absorbing some of the increased costs. During a recent earnings call, Macy’s CFO Adrian Mitchell stated that while they have obtained some vendor discounts, “we’re absorbing some of that price as well.”
The decision on how much of the increased costs to pass on to consumers without losing loyal customers is a tough one. This is particularly challenging for department stores that have seen a decline in customers due to the rise of online shopping.
In fact, sales at department stores accounted for just 2.6% of retail sales in 2023, down from 14.1% in 1993. At Queens Center, some Macy’s customers reported not noticing any price increases, especially when using the company’s frequent coupons.
“The difference isn’t big; a little bit higher,” said Raphaelina Garcia, 33, who was shopping for a dress for an upcoming wedding. “When you have the coupon, it’s the same price [as before].”
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