The international tariff situation remains extremely fluid. The recently announced US-UK trade deal and thawing of the US-China relationship are positive signs. The Brexit reset deal is also a welcome step forward for UK retailers, providing greater stability by making cross-channel trade more predictable and cost-effective. Lower compliance costs and fewer delays will free-up budget to reinvest in customer experience and innovation.
That said, uncertainty remains the underlying sentiment. As a result, many retailers have not yet made major operational changes in response and instead are pausing activity and holding off on major decisions, reflecting the broader uncertainty across international markets. With developments shifting rapidly, businesses are reluctant to commit to spending or take on additional risk without clearer direction.
So, who is currently feeling the pinch? Clearly, some sectors are already dealing with the pressure of tariffs more directly than others. In the retail industry, fashion and footwear are likely to be hit in both directions, with new charges adding to existing market access duties, impacting both import and export activities. These categories are particularly vulnerable to cost volatility, not least because when prices shift unpredictably, consumers tend to hold back, and in fast-moving, cost-sensitive sectors like fashion, that quickly disrupts demand.
DIY and home improvement are also exposed, largely due to the increased cost of raw materials such as steel and aluminium. In these categories, margin pressure is amplified across the supply chain, and as products become more expensive to source, those costs are difficult to absorb without impacting retail pricing.
Luxury goods face similar challenges. With international supply chains and high-value items, even marginal shifts in duty rates can affect competitiveness. The wider concern is that any additional charges will be matched by retaliatory measures, escalating the issue and increasing complexity for retailers trading across multiple regions.
Drawing on experience
The disruption caused by tariff uncertainty shares clear parallels with the early stages of the COVID-19 pandemic. During that period, many retailers were forced to rethink their fulfillment models by shifting stock away from central distribution centres into stores that could operate as micro or mini warehouses. This flexibility allowed them to adapt quickly to changing conditions and continue serving customers despite widespread disruption.
Today, similar scenarios are emerging. If the US market becomes less viable due to tariffs, retailers may look to reduce their reliance and pivot to new regions. On a general level, evidence is emerging that these kinds of changes are already underway, with recent media reports suggesting that Chinese companies are “purging [the] supply of foreign parts” as a direct impact of the trade war.
For some retailers, the prospect of long-term tariffs is prompting a broader reassessment of the US market. If duties increase to the point where pricing becomes uncompetitive, businesses may shift focus elsewhere. The question is no longer just about absorbing additional costs, it’s whether, under the circumstances, continued investment in the US can still deliver a viable return.
For the retail sector, in particular, taking proactive steps, such as entering new markets, requires more than just intent – it demands a supply chain that can scale and adapt quickly. Just as during the pandemic, businesses must be able to identify where stock is held and reroute fulfillment through the most efficient available option. There’s no doubt that retailers that were able to adapt during COVID are better placed to navigate the current challenges, while those that weren’t will need to reassess how resilient their supply chains are and make changes accordingly.
Planning ahead
For retailers looking at new and untapped markets to take up the slack, due diligence is essential. Any expansion decision must start with a clear understanding of the effective landed cost, including everything from duties, taxes and payment fees to return logistics and the broader cost of doing business in a new territory. Without that baseline, it’s challenging – and risky – to build a model that protects margin and supports growth.
Take delivery infrastructure, for example, where savings made through lower tariffs can be quickly lost if fulfilment is unreliable. Last-mile delivery must be consistent and local distribution networks must be in place before market entry. The same applies to digital payments because, while global coverage has improved, businesses still need to assess issues such as accessibility, fraud risk and compliance for each region.
Next steps
So, where does this leave retailers looking to move forward? Looking at fulfilment again, retailers are re-evaluating how and where they move products to minimise exposure and control costs. In some cases, it may be more cost-effective to ship from a store or a nearshore location rather than a central warehouse, while others may benefit from routing through jurisdictions with lower duty rates. Whatever strategy is applied, these decisions rely on having the infrastructure in place to act quickly, backed by systems that provide clear stock visibility across all channels.
An effective order management system plays a central role here. The ability to change sourcing and fulfilment routes in real time, based on cost, availability or demand, gives retailers the flexibility to adapt as conditions evolve. Retailers who get these capabilities in place sooner rather than later will be much better placed not just to weather the current storm but to come out the other side much less exposed to unexpected changes in market conditions.