US Tariffs Could Hit Retailers Hard

Though tariffs may not be good for American retailers and consumers, according to an expert, some retail segments may be more susceptible to the effects of a so-called trade war more than others. That outlook, though, could potentially change, TheStreet reported.

“Apparel retail has not been affected so far, but the operative phrase is so far,” Daniel McCarthy, an assistant professor of marketing at Emory University’s Goizueta Business School, told TheStreet. “It’s still limited to appliances and electronics.”

Retailers such as Best Buy, Costco and Walmart could be the merchants soonest affected by tariffs. However, they might have other effects as well: Business leaders have “expressed concern about the possible adverse effects of tariffs and other proposed trade restrictions, both domestically and abroad, on future investment activity,” according to the latest Federal Reserve meeting minutes. They also said that “capital spending had been scaled back or postponed as a result of uncertainty over trade policy.”

The news comes as the trade war that is playing out on a global scale now is hitting business outlooks — and the worldview of central banks. Thus, the heads of several central banks — ranging from the Federal Reserve to the European Central Bank (ECB) and the Bank of Japan, as Reuters reported — are ratcheting down expectations for global economic performance.

In remarks from central bankers themselves, Chair of the Federal Reserve Jerome Powell noted, “Changes in trade policy could cause us to have to question the outlook.” The newswire said this was among Powell’s “strongest remarks” yet on the issue. He added, “For the first time, we are hearing [from business leaders] about decision to postpone investment, postpone hiring, postpone making decisions … If you ask, is it in the forecast yet, is it in the outlook, the answer is no. And you don’t see it in the performance of the economy.”