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Japan Today
5 days ago
- Automotive
- Japan Today
U.S. retail sales slide after a spring rush to beat tariffs
FILE - A Tariff Free sign to attract vehicle shoppers is at an automobile dealership in Totowa, N.J., on April 30, 2025. (AP Photo/Ted Shaffrey) By CHRISTOPHER RUGABER and ANNE D'INNOCENZIO Retail sales fell sharply in May as consumers pulled back from a spending surge early this year to get ahead of President Donald Trump's sweeping tariffs on nearly all imports. Sales at retail stores and restaurants dropped 0.9% in May, the Commerce Department said Tuesday, after a decline of 0.1% in April. Sales jumped 1.5% in March. The figure was pulled down by a steep drop in auto sales, after Americans ramped up their car-buying in March to get ahead of Trump's 25% duty on imported cars and car parts. Excluding autos, sales fell 0.3% in May. The sales drop is hitting after sharp declines in consumer confidence this year. Still, inflation has cooled steadily and unemployment remains low, which could fuel steady spending in the coming months, as the economy has remained mostly solid. A category of sales that excludes volatile sectors such as gas, cars, and restaurants rose last month by 0.4%, a sign that consumers are still spending on some discretionary items. Overall, the report suggests consumers have pulled back a bit but not dramatically so. The retail sales report covers about one-third of consumer spending, with the other two-thirds consisting of spending on services. Economists expect overall consumer spending to grow in the April-June quarter. 'Today's data suggests consumers are downshifting, but they haven't yet slammed the brakes,' Ellen Zentner, chief economic strategist for Morgan Stanley wealth management, said in an email. 'Like the economy as a whole, consumer spending has been resilient in the face of tariff uncertainty.' Yet many categories saw sharp declines. Car sales plunged 3.5%, while sales at home and garden centers dropped 2.7%. They fell 0.6% at electronics and appliance stores and 0.7% at grocery stores. There were some bright spots: Sales rose 0.9% at online retailers, 0.8% at clothing stores, and 1.2% at furniture stores. Gas station sales dropped sharply, by 2%, but that mostly reflects lower prices. The retail sales report isn't adjusted for inflation. Sales at restaurants and bars, a closely watched indicator of discretionary spending, fell 0.9% in May, though that followed a solid gain of 0.8% in April. Some consumer products companies say they are seeing the impact of tariffs on their own costs and sales. Paul Cosaro, CEO of Picnic Time, Inc., which makes picnic accessories like baskets, coolers, and folding chairs, said that orders from retailers are down as much as 40% this summer compared with a year ago. His company sells to a variety of stores like Target and Williams-Sonoma. Cosaro noted that some stores have been cautious because they're not sure how shoppers will react to higher prices. Some canceled orders because Cosaro couldn't tell them how much the new prices would be due to all the uncertainty. Roughly 80% of the company's goods are made in China, with the rest in India and Vietnam. The company, founded roughly 40 years ago and based in Moorpark, California, was forced to raise prices on average from 11% to 14% for this summer selling season, Cosaro said. A folding outdoor chair now costs $137 this month, up from $120 in late 2024, he added. The company's sales are still down this year, even though some shoppers accelerated their purchases out of concern that prices would rise. 'Shoppers are very price sensitive,' Cosaro said. The company has implemented a hiring freeze because of all the extra tariff costs, he added. So far this year the company, which employs from 70 to 100 people, has had to pay $1 million in tariffs. A year ago at this time, the bill was a third of that amount. Liza Gresko, a 42-year-old mother of three in Doylestown, Pennsylvania, said she has watched as prices for basics like toothpaste or shampoo begin to rise again, and has started to buy groceries in bulk to save money, as well as switching to generic brands. 'If I make these small changes, then we are sacrificing for the long term goal of saving more,' Gresko said. She has also begun shopping at thrift stores for children's clothes, rather than Macy's or H&M. 'Even with store sales and discounts, the rising costs make it unsustainable to continually purchase new clothing,' she said. The retail sales report comes as other evidence indicates shoppers have been pulling back more amid worries about higher prices from Trump's tariffs. Naveen Jaggi, president of retail advisory services in the Americas for real-estate firm JLL, said that he's hearing from malls that sales are slowing down heading into the official summer months. Retailers are pushing up back-to-school promotions to this month from July, he said. They want to get shoppers in early for fear consumers may not want to spend in the later months when prices will likely go up, he said. So far, Trump's tariffs haven't yet boosted inflation. Consumer prices rose just 2.4% in May compared with a year ago, the government said last week. Many stores and brands, including Walmart, Lululemon, and J.M. Smucker Co., have said they plan to or have raised prices in response to tariffs. Deckers Outdoor, which is behind such shoe labels as Hoka and Uggs, said late last month that it plans price increases, which will likely hurt sales. 'We expect to absorb a portion of the tariff impact,' Chief Financial Officer Steven Fasching told analysts. 'We also believe there is potential to see demand erosion associated with the combination of price increases and general softness in the consumer spending environment.' © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
Japan Today
29-05-2025
- Business
- Japan Today
Already numb to tariff twists, U.S. importers see legal decisions as another price of doing business
By MAE ANDERSON and ANNE D'INNOCENZIO Businesses rattled by President Donald Trump's on again, off again tariffs absorbed more jolts on Thursday after a U.S. appeals court temporarily blocked a federal court order that would have halted most of his taxes on foreign imports. A three-judge panel of the U.S. Court of International Trade ruled late Wednesday that Trump overstepped his authority when he invoked the 1977 International Emergency Economic Powers Act to declare a national emergency as justification for his wide-ranging tariffs. But a federal appeals court on Thursday afternoon granted a motion allowing the government to continue collecting tariffs under the emergency powers law while the Trump administration challenges the trade court's decision. Even before the Court of Appeals for the Federal Circuit stepped in, business owners and the National Retail Federation had said that without a definitive word in the case, the Wednesday ruling only created more uncertainty and made it harder to budget and plan. 'The ruling by the U.S. Court of International Trade blocking most of President Trump's tariffs is just another chapter in this difficult journey toward a clear, consistent and strategic trade policy," Jonathan Gold, the trade group's vice president of supply chain and customs policy, said in an emailed statement. "We urge rapid resolution as this process continues in the courts.' The president invoked the emergency powers law in early April when he imposed varying import tax rates on products from dozens of countries, including the biggest trading partners of the U.S. After financial markets showed signs of panic, Trump lowered the rate to 10% for every country except China, whose goods were taxed at 145%. Jonathan Silva, the owner of WS Game Company, said he did not intend to change his plans based on the ruling. He has the board games his company sells made in China, 'We know that this will take time for the appeals process to take place and a final ruling to be instituted,' Silva said. 'But we are hopeful that this will be the beginning of a more academic use of tariffs in the coming months and years. All we want to do is have certainty in the environment that we are operating in, as the day-to-day retaliations and pauses are not conducive to business operations.' The CEO of electronics retailer Best Buy, Corie Barry, told reporters on Thursday that the legal news did not make her more or less optimistic but rather underscored the importance of continuing to remain agile while not changing course in response to near-daily tariff developments. 'I don't think there's anything we would do differently based on the news overnight,' Barry said. 'What I really tried to work with the team on is to not actually overreact to any given moment in time, but instead to stay maniacally focused on our customers and ensure we are bringing the right assortment, price, and (promotions) to them, whatever the backdrop.' Barry told analysts that Best Buy has taken a variety of steps to offset higher tariff costs, including pushing vendors to spread out where they do manufacturing. The company is increasing some prices to absorb tariff-related costs, she said, calling the move 'a last resort.' She declined to be specific given the fluid situation. Jim Umlauf, whose business, 4Knines, based in Oklahoma City, makes vehicle seat covers and cargo liners for dog owners and others, said the court ruling did not offer reassurance but only further complicated his decision-making. 'At this point, we don't know whether the decision will hold, whether it applies to (Trump's) original 2018 tariffs, or how it will be enforced,' he said. 'Without clarity, we're left planning around a moving target. Like many others, we've already locked in quotes and made purchasing decisions assuming tariffs would remain in place. This development, rather than offering relief, introduces new logistical complications at the worst possible time.' Kelsey O'Callaghan, the founder of a Salt Lake City kitchen and bathroom accessories company called Dorai Home, said she expected the trade war to continue. The constant flux since Trump's return to office has made her 'numb,' but O'Callaghan said she has tried to make educated decisions. The company already postponed the launch of several new products, laid off the CEO and some other key employees. It paused order shipments from China in early April but resumed some on a staggered basis when the president Trump lowered the rate for Chinese goods to 30% for 90 days. Now, Dorai Home plans to test price increases to see if shoppers will still buy its products. 'In a business sense, you have to try to create as much certainty and stability as you can with the variables you can control," O'Callaghan said. But some businesses were more optimistic. Burlington Coat Factory CEO Michael B. O'Sullivan said Thursday that the tariff pause might help discount retailers like his that buy excess inventory from other retail companies. The court ruling and continued uncertainty may further fuel a production race that started when the tariff rate for Chinese products were substantially reduced, O'Sullivan said. 'There's now a huge rush on production and shipping across the industry. Now, the court decision last night could add to that rush,' he said. 'Instead of shortages, this topsy-turvy stop/start surge has the potential to create attractive buying opportunities.' © Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
