How Should Retailers Prepare for Tariffs?

The international battle over tariffs is complicated, and the only certainty is market circumstances change weekly...  if not daily.

Today, as always, Miller Zell is focused on finding business solutions to provide value to our clients, whatever the present challenges are. 

The good news? Efficiently managing international supply chain complexities is a fundamental part of our core capabilities and has been for years. For example, since the first wave of tariffs against China in 2018, we’ve substantially enlarged our domestic and international vendor options and relationships, researching factories in Turkey, Mexico, Colombia, Vietnam, Cambodia, Thailand and Taiwan, as well as our North America options. We view this as an ongoing mission to seek supplier and risk mitigation strategies for our clients.

So, yes, we have some thoughts on how retailers can manage the impact of tariffs.

It’s coming, but it’s also already here

Global merchandise trade volumes are expected to contract by 0.2% this year, after rising 2.9% in 2024, according to the World Trade Organization.

China-to-U.S. bookings have declined 60% since April 9, according to the Wall Street Journal on May 7. U.S. importers and foreign exporters are rushing to get products to the U.S. before the July 9 deadline, when global tariffs kick in (presumably).

While businesses and the logistics industry are scrambling for insights and options, consumers haven’t truly been hit. Yet.

To state the obvious: Consumers are a critical variable. There likely will be a wide range of reactions, predictable and unpredictable, from spending to brand loyalty to social media engagement. And we’re not even going to touch the political mudslinging.

For retailers, it’s not just about pricing, timing and inventory challenges. It’s also about your customers and how you communicate with a diversity of demographic and economic profiles. Frustrated consumers can be on edge when shopping, and that could lead to in-store challenges for your associates, with social media sharing ready to pounce with viral moments of drama and awkwardness.

So, communication about strategies over the oncoming months should be frequent and top-to-bottom throughout your store fleet as well as executive offices. A concise but authentic pep talk also might come in handy.

So how do you manage tariffs as a potential new normal in retail?

There’s going to be a lot of complicated, triangulating math over the next few months, not to mention arbitrary pratfalls and successes. While there always is uncertainty while dealing with global supply chains, the uncertainty going forward is unprecedented, and that’s not an overstatement. 

So here is a simplified outline of the focuses and types of planning that Miller Zell does on behalf of our clients to save money, ensure business continuity and mitigate risk.

There are five issues at play. 

Cost: Whether it’s raw materials or finished products, you want to minimize spending as much as possible, and tariffs are a potentially massive new variable here. 

Timing: This is not about promised dates but consistent in-hands performance — this week, next year and in 2028. Many vendors make promises. Miller Zell finds those who keep them and then cultivates a long-term relationship.

Quality: If you achieve the first two but not No. 3, it’s a failure. Without quality in custom manufacturing, you or your customers — and most likely both — will be uniformly unhappy. Ensuring quality with the products you sell and all your store touchpoints is about protecting your brand. Quality shortcomings quickly become PR disasters, both within your company and on social media.

Trust: Miller Zell sometimes pays more to receive certainty with timing and quality demands. While perfection is not always attainable amid the complexities of international trade, aggressively seeking and building trusting vendor relationships provide value and help us — and our clients — sleep at night.

Transparency: An important subcategory of “trust.” There will be hiccups. Unanticipated variables happen — heck, Mother Nature can be, er, difficult. But honest updates and course corrections explained in detail minimize stress and finger pointing.

While tariff challenges often will lead with cost, your ability to pivot with insight and agility and mitigate risk will lead to marketplace performance that outshines your competition and fosters brand loyalty.

Know that you’ll hear ambitious pitches with big promises in the coming months, as vendors new and old jockey for position, sometimes built on beating the system (read: cheating). We recommend avoiding too-good-to-be-true promises.

Along those lines, we are becoming HTS (Harmonized Tariff Schedule) code experts so we can make sure we are using the correct HTS codes, as customs has been scrutinizing clearance documents to catch companies trying to skirt the system.  

Our goals aren’t changing. We’ve always been obsessively focused on being nimble and proactive amid rapidly evolving market conditions.

We’d be glad to discuss the creative pragmatism that guides our end-to-end services for optimized branded environments. It’s been providing our clients measurable value for over 60 years, tariffs or not.