In the wake of Donald Trump‘s 2024 presidential win, retailers like Walmart, Costco and Target are gearing up for a “massive upheaval” over his campaign pledge to slap tariffs on imports while keeping a close eye on tax cuts and a new regulatory environment, according to a report.
During the campaign, Trump proposed putting 10% to 20% tariffs on the majority of imported goods and 60% to 100% tariffs on goods from China.
“It would be a massive upheaval to most of the cost structures for these companies,” Chris Walton, a former Target executive and founder of Omni Talk, a podcast about the retail industry, told Business Insider.
US households would lose up to $78 billion in spending power a year, the report said, citing analysis from the National Retail Federation.
“A tariff is a tax paid by the US importer, not a foreign country or the exporter,” Jonathan Gold, the organization’s vice president of supply chain and customs policy, told the outlet. “This tax ultimately comes out of consumers’ pockets through higher prices.”
But Tinglong Dai, a business professor at Johns Hopkins, said retailers have proved adept at handling earlier tariffs without much disruption.
“Retailers have become incredibly adept at absorbing these frictions,” Dai told Business Insider.
“You can say it’s a negotiating strategy and it won’t actually come to pass, or you can say will come to pass, maybe in a diluted form and not that severe, but it’s causing a lot of nervousness,” Global Data retail analyst Neil Saunders said about Trump’s proposals.
The president-elect is also expected to extend his 2017 tax cuts, as well as reduce corporate taxes, which could give consumers more disposable income and increase spending.
“The whole of retail is very dependent on the middle class and what you can eke out of their spending levels,” Saunders said.
Any tax changes would be less disruptive than tariffs because they take longer to work their way through the economy, and retailers routinely manage such changes.
“What’s different is this is of a size and scope that the retail industry hasn’t seen in 100 years,” Walton said.
Trump’s aims on immigration are more complex, especially if he follows through on his pledge of mass deportations.
“Everyone’s gonna feel the brunt of that,” Walton told Business Insider. “If that were to happen, it’s a tough thing to prepare for, because the collateral damage from it could be pretty expensive.”
A tightening of legal immigration could also present challenges.
Restricting the H1-B visa programs for skilled workers could choke off the avenues retail giants like Amazon, Walmart and Target rely on to attract tech talent, Saunders said.
“That’s actually very unhelpful for a lot of retailers, especially in areas like technology, which a lot of retailers are involved,” he said.
A relaxed regulation climate could result in more deals.
Federal Trade Commissioner Lina Khan isn’t likely to be part of a Trump administration.
In her place, Saunders said, an FTC that is more receptive to deals could emerge.
But Walton cautioned that there are a lot of uncertainties remaining in a Trump White House.
“It can wax and wane to whatever the flavor of the month is in terms of where his administration wants to focus or who he wants to benefit,” Walton told Business Insider.
