Growing consumer pessimism leads retailers to worry about economy, tariffs impact retail sector negatively.

From Yahoo Finance: 2025-03-25 12:34:00

US consumers are growing more pessimistic about the economy, with expectations hitting a 12-year low. Concerns about tariffs and rising grocery costs weigh heavily on their outlook. President Trump’s tariffs on China, Mexico, and Canada, along with impending reciprocal tariffs, could impact the consumer products sector by up to $134 billion.

Signs of consumer stress are emerging as retailers like Nike warn of hits from tariffs. Walmart and Target are managing tariff risks by bargaining with suppliers to keep costs low. Department store retailers like Macy’s and Kohl’s issue weaker-than-expected outlooks due to tariff uncertainty, inflationary pressure, and needed adjustments.

Abercrombie & Fitch also posts weaker guidance due to tariffs impacting freight costs and consumer spending. The company expects adverse impacts on the first half but benefits in the second half from lower freight costs. Actions have been taken to avoid price increases and maintain customer value perception amidst trade uncertainty. Dollar General CEO Todd Vasos expects consumer trade-down to discount stores if tariffs slow the economy further. Lower-income consumers, who make up 60% of Dollar General sales, are already financially stressed. Investors await Dollar Tree earnings to see how tariffs may impact margins and mitigation strategies.

Read more: Retailers are getting antsy over consumer environment, tariffs