Economic impacts from President Donald Trump’s tariff plan are expected to become clearer in the future, but retailers are already reporting an impact. Data released this week showed that businesses have been stockpiling goods as they brace for higher prices.
Vic Veda of the Michigan Retailers Association talked with WWJ’s Chris Fillar this week to take a look at what’s happening behind-the-scenes in the world of retail.
“Our retail index for March was very interesting,” Veda said. “The main sales numbers were still down, showing declining sales for March. But our inventory numbers were actually up. The inventory score for March with 57.1 on 100-point index, so showing some increases in inventory.”
This data is in line with numbers released Wednesday by the Bureau of Economic Analysis that showed real gross domestic product (GDP) in the U.S. fell at an annual rate of 0.3% during the first quarter of the year.
“The decrease in real GDP in the first quarter primarily reflected an increase in imports, which are a subtraction in the calculation of GDP, and a decrease in government spending,” said the BEA. “These movements were partly offset by increases in investment, consumer spending, and exports.”
Trump has announced a variety of tariffs on goods from countries around the world, including tariffs on our main trading partners. While he has said the plan will bring jobs back to the U.S., many economists are skeptical about the strategy. Since U.S. businesses have to pay higher tariffs on imported goods when the tariffs kick in, they are expected to pass those costs along to consumers who have already been dealing with high inflation for years.
Veda said that in Michigan, retailers have certainly been stockpiling in anticipation of the tariffs.
“They’re stockpiling early or stockpiling more for the inventory that they expect to sell a lot of that may be impacted by tariffs – and any kind of shipping delays because of supply chain disruptions being caused by those tariffs,” she explained. Veda also said that members of her organization have expressed concerns about consumer perception around increasing prices, adding that “a lot these businesses have really eaten away at their profit margins and tried to eat as much of these expenses as they can as these prices have increased.”
Data released last month by the National Retail Federation also indicates that consumers are worried about the impact of tariffs on prices. Fillar mentioned a recent move from online retailer Amazon that made headlines. The company announced that it would begin showing how much tariffs raise the price of its products.
“You know, price transparency is definitely something that a lot of consumers feel very strongly about and retail is responding in that,” said Veda. “You know… it’ll be interesting to see how different retailers respond to this. We do see things like surcharge transparency on receipts if there’s credit card surcharges. So, I wouldn’t be surprised to see things like tariff surcharging or you know, a breakdown of where that price increase is coming from for more retailers.”
Some of the Trump tariffs kicked off this month, so data from March does not yet show their impact. Veda said that a new round of surveys was sent to Michigan Retailers Association this week.
“We’re hoping to get some good member feedback and get some more information about what retailers really are experiencing right now, because there’s a lot going around,” she told Fillar. So far, the group expects small businesses to be hit particularly hard by the tariffs.