March 4 (Reuters) – U.S. retailers are beginning to cautiously re-evaluate their strategies as the tariff landscape shifts again, injecting fresh uncertainty into consumer spending patterns for the year.
The latest batch of earnings commentary from retailers showed chains from Best Buy to Target and Abercrombie & Fitch are still grappling with shifting tariffs after President Donald Trump raised the temporary levy on imports to 15% from 10% — the maximum allowed — after the Supreme Court struck down the government’s emergency duties.
“The core issue isn’t the elevated tariff rates, it’s the policy whiplash. Retailers can plan for a tough environment, but they can’t plan around rules that change day to day, or week to week,” eMarketer analyst Zak Stambor said.
Abercrombie & Fitch was the only retailer so far to explicitly bake the revised 15% tariff rate into its annual forecast, assuming a 70-basis-point tariff impact — roughly $40 million based on 2025 sales of $5.27 billion — excluding potential refunds from struck-down duties.
Earlier this year, Abercrombie had estimated about $90 million in tariff costs for 2025, or a 170-basis-point hit.
Meanwhile, top U.S. electronics retailer Best Buy, which imports heavily from China, said on Tuesday that the Supreme Court’s recent decision has opened the door to a lower temporary tariff rate, though the company has not yet modeled major impacts into its outlook.
The U.S. policy uncertainty continued to reverberate globally as well, with German sportswear maker Adidas, which is among the companies facing steep tariffs on imports from Vietnam and other countries, noting that U.S. levies and a weak dollar will together reduce 2026 earnings by 400 million euros ($465.48 million).
PRICE HIKES: ‘THE LAST RESORT’
Best Buy executives noted that there was still “a lot of moving pieces” and said the company is negotiating with suppliers, diversifying sourcing to manage the volatility, while treating price hikes as a last resort.
Target executives echoed the sentiment.
“Price is the very last lever we want to pull because we know price matters to consumers on a budget. That’s the mindset we’ll have for however the variables unfold this year,” Target CEO Michael Fiddelke said on Tuesday.
Retail bellwether Walmart last month issued a conservative annual forecast, saying that the U.S. consumer was still being choiceful with their spending.
“While tariff uncertainty remains elevated, this is not new territory for the industry. In fact, the tariff landscape looks more manageable today than it did through much of 2025,” Arun Sundaram, analyst with CFRA Research, said.
“The priority now is delivering more value to a still stretched consumer while protecting margins as best they can.”
SPENDING REMAINS CAUTIOUS
Last year, consumer-facing companies struggled to adapt to the volatile tariff environment, flagging millions in costs. Global companies projected a combined financial impact of $21.0 billion to $22.9 billion for 2025 and nearly $15 billion for 2026, according to a Reuters analysis of corporate statements, regulatory filings and earnings calls from July 16 to September 30.
This year, lower U.S. tariffs and tax rates were expected to boost spending after months of consumer caution, but an escalating conflict in the Middle East has led to fresh concerns.
Abercrombie, which operates around 17 of its stores in the United Arab Emirates and Kuwait, warned of a “slight sales hit” due to the conflict.
“(The conflict) creates risk of shipping problems and higher shipping costs. Higher gas prices also raise costs and could depress consumer spending,” said David Swartz, senior equity analyst at Morningstar.
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(Reporting by Anuja Bharat Mistry and Neil J Kanatt; writing by Aishwarya Venugopal in Bengaluru; editing by Arpan Varghese and Alan Barona)
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