Tariffs on Imported Goods From Canada, China Go Into Effect; Mexico Paused

President Trump on Saturday signed an executive order that imposes 25 percent tariffs on imports from Canada, while adding an additional 10 percent levy on goods from China. Canada responded hours later with retaliatory tariffs of its own. China's commerce secretary said that country would challenge the tariffs through the World Trade Organization, according to Reuters, claiming that the move "seriously violates" WTO rules.

The tariffs take effect at 12:01 a.m. Tuesday.

On Monday, Trump said he is pausing for one month his new 25 percent tariffs on goods imported from Mexico after that country’s president agreed to immediately send 10,000 soldiers to the U.S. border to prevent drug trafficking from Mexico. Trump in a social media post said that during the pause “we will have negotiations” on the tariffs “headed by Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick, and high-level Representatives of Mexico.”

Total Retail's Take: Trump is following through on his campaign pledge to impose tariffs on imported goods, acknowledging that the action could cause "some pain" for consumers in the form of higher prices but insisted his vision for the country "will all be worth the price that must be paid." Of course the tariffs will have an impact on the retail industry, both in its effect on consumers as well as potential disruption to supply chains. Here are some thoughts from retail analysts on the news:

According to Juan Pellerano-Rendon, chief marketing officer at Swap, the e-commerce operating system (OS) that manages operations for direct-to-consumer brands, retailers and brands are acting on tariffs in five key ways:

• Stockpiling Goods: Brands are pre-purchasing inventory to avoid post-tariff price hikes. Microsoft, Dell, and HP are leading the charge while manufacturing purchasing surged to a yearly high.
• Passing Costs to Consumers: Rising costs are inevitable, and brands like Walmart and Columbia Sportswear are preparing to adjust prices to offset tariff impacts.
• Shifting Supply Chains to Alternative Markets:  From Steve Madden's pivot to Vietnam and Brazil to Corridor's exploration of Nepal, brands are diversifying their sourcing strategies.
• Bringing Back Domestic Production: Tariffs incentivize a return to U.S. manufacturing, but higher labor costs pose challenges. Some brands are exploring domestic production for specialized product lines.
• Adding Innovative Tech Partners: To navigate the tariffs, it's no longer something that brands can do alone. There will likely be many shifts and changes along the way that require a partner that helps you stay compliant.

The other part of the equation is what the tariffs will mean for consumer spending. New research from Smarty, an online shopping rewards app, reveals the tariffs could create spending shifts across industries, shifting U.S. consumer loyalty toward budget-friendly and domestic brands. The survey, which polled 1,022 U.S. adults, revealed the following:

• 49 percent will buy less frequently if tariffs raise prices;
• 40 percent will switch to a cheaper brand; and
• 50 percent say they're more likely to consider second-hand or local alternatives.

Lastly, the National Retail Federation (NRF), the industry's largest trade association, offered the following statement in a press release on Saturday:

“We support the Trump administration’s goal of strengthening trade relationships and creating fair and favorable terms for America," said David French, executive vice president of government relations. “But imposing steep tariffs on three of our closest trading partners is a serious step. We strongly encourage all parties to continue negotiating to find solutions that will strengthen trade relationships and avoid shifting the costs of shared policy failures onto the backs of American families, workers and small businesses.

“The retail industry is committed to working with President Trump and his administration to achieve his campaign promises, including strengthening the U.S. economy, extending his successful Tax Cuts and Jobs Act, and ensuring that American families are protected from higher costs.”