MICHELLE CHAPMAN
4 min read
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Retailers are trying to navigate their way through economic uncertainty in 2025. Tariffs, inflation and lingering fears of a recession have left many Americans uneasy and pulling back on spending.
Because consumer spending accounts for about 70% of U.S. economic activity, a retreat would heighten the odds of contraction for the U.S. economy.
With earnings from major retailers wrapping up it's become clear that the trade war launched by the Trump administration is impacting retailers in very different ways.
Walmart earned a public rebuke from President Donald Trump after it said last week that it has already raised prices and will have to do so again this summer, right when the back-to-school shopping season kicks off. Trump told the retail giant that it should “eat” the additional costs created by his tariffs.
Home Depot said Tuesday that it doesn’t expect to raise prices because of tariffs, saying it has spent years diversifying the sources for the goods on its shelves. However, executive Billy Bastek said some products on Home Depot shelves now may disappear. “There’s items that we have that could potentially be impacted from a tariff that, candidly, we won’t have going forward,” Bastek said in a conference call with industry analysts.
While retailers are sorting out how to best operate in a trade war, their customers are taking stock of their finances and the trends are not good. U.S. consumer sentiment declined slightly in May for the fifth straight month, surprising economists, as Americans increasingly worry that President Donald Trump’s trade war will worsen inflation.
The preliminary reading of the University of Michigan’s closely watched consumer sentiment index, released Friday, declined 2.7% on a monthly basis to 50.8, the second-lowest level in the nearly 75-year history of the survey. The only lower reading was in June 2022. Since January, sentiment has tumbled nearly 30%.
Here's a quick look at some poignant details from retailers reporting quarterly financial results Wednesday.
Target
Target's sales dropped more than anticipated in the first quarter, and the retailer warned they will slip for all of 2025 year as its customers, worried over the impact of tariffs and the economy, pull back on spending.
Target also cut its annual sales projections. The company now expects a low-single digit decline for 2025 after previously projecting a 1% increase for sales.
Chairman and CEO Brian Cornell said during Target's conference call that the chain has been dealing with multiple issues impacting its business, including tariffs and declining consumer confidence.
