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Retail ‘Remains Vulnerable’ to Tariff-Led Slump

Such levies seen having growing impact on driving prices up, report finds.

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Retail ‘Remains Vulnerable’ to Tariff-Led Slump
PHOTO: ISTOCKPHOTO

Even though retail activity has remained upbeat over much of the summer, the sector “remains vulnerable” in the months ahead, a new report from credit-rating agency KBRA concludes. The reason: Households and businesses are expected to cut back on spending as tariff-related price increases make their way through to consumers.

“Retail sales increased for a second consecutive month in July, defying expectations of a slowdown in the wake of the Trump Administration’s tariffs, for now,” the report notes. “However, the longevity of continuing positive retail momentum is in question. Tariffs with large trade partners, including China, have been repeatedly delayed and are not yet actually in effect. Retailers additionally built inventories in advance of tariffs, meaning that in-place tariffs have not yet fully worked their way through to consumers.

“Higher prices resulting from these policies will likely materialize through the remainder of the year, serving as a headwind to consumer spending.”

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