With tariffs, it’s duck-and-cover time

Like Cold War-era schoolchildren ducking under their desks in case the former Soviet Union launched a nuclear bomb, retail executives these days are taking part in their own geopolitical-driven drill, in this case how to take cover should President Donald Trump fulfill his promise of higher and broader tariffs.

While mid-century students had duck-and-cover mascot Bert the Turtle to guide them through the difficult time, retail executives have something even more adorable: retail experts with MBAs.

“The impact of tariffs will be seismic,” warns a white paper from Swap, the London-based e-commerce platform that specializes in cross-boarder shipping and returns for retailers.

NRF predicts apparel could be the retail sector whacked hardest by tariffs, paying as much as $24 billion annually, followed by toys (as much as $14.2 billion), and furniture ($13.1 billion).

Along with US companies facing “thinner profit margins,” Swap warns of ripple effects including targeted countries retaliating “with their own tariffs” and forcing “small businesses to raise their prices, potentially driving away cost-conscious shoppers.”

Protect and swerve: A white paper from consulting firm BRG offers four “tariff mitigation strategies for retailers,” along with potential drawbacks.

While one strategy, passing the costs of tariffs entirely onto consumers through higher prices, for example, could serve to “protect margins,” the potential drawbacks are harrowing, including—shareholders, avert your eyes!—“market share loss,” “reduced demand,” and “price wars.”

Passing the costs only partially onto consumers, on the other hand, could enable retailers to strategically “target price increases on less price-sensitive products” but also could reduce demand and result in “brand damage.”

A third strategy, to “rebalance the supplier base to lower product costs” by sourcing from countries “with lower production, tariff, and logistics costs” has its own set of potential pitfalls, including “production delays and logistical complexities.”

The final strategy is to get suppliers in high tariff countries to eat the cost of the tariffs by negotiating better prices with them, and then consolidating suppliers and adding volume to those that lower prices. The risk of that approach, naturally, is “strained supplier relationships” and “risk of reduced product quality or longer lead times.”

Stock(pile) market: Swap, meanwhile, suggests that retailers “stockpile” inventory before tariffs are enacted.

If that’s your jam, you’d best get cracking: Trump said recently that he plans to impose 25% tariffs on Canada and Mexico, along with raising Chinese tariffs by 10%, on February 1.