IT'S SO TAXING

By all accounts, 2024 was a decent year for retail

Industry sales grew 3.6% over 2023 according to the U.S. Census Bureau

2025?

I have big concerns, especially this one 👇

Over the weekend, the U.S. government announced plans for an incremental, unilateral tariff on imports from China, Canada, and Mexico

This has been anticipated, but as with anything political, it’s rarely a sure thing

Yesterday, there was a 30-day delay granted for Canada and Mexico, but not China

This additional import tax is a potential iceberg for brands and retailers

It is a tax, after all

Tariffs are just import taxes, paid to the U.S. government by the companies who import the products

It is not paid by the countries who export the products

This is not widely understood among the general public because it is being marketed differently by the U.S. government

It is, however, well-understood by people in the consumer industry

Because it represents a cost increase. A big one

Having worked for a global brand during the pandemic-induced supply chain shocks, cost increases lead to inevitable retail price increases

This tariff campaign will do the same. Your brand will increase prices

If you don’t, your margin will suffer and you’ll jeapordize your profitability, and probably your job

In the apparel industry, China, Canada, and Mexico represent 26% of imports

In other consumer products like electronics, toys, and sporting goods, it’s much higher

So this is a big deal. It will create inflation for consumers and risk the growth of the economy

This is why I’m worried

Can you move the production to another country? Yes you can, but that takes time

And everyone will do this, creating more competition for factory space in Vietnam, India, Bangladesh, so you won’t save as much cost as you hope

As an optimist, I think this might be a temporary situation that is serving as a bargaining chip for something else the government wants to achieve

As a realist, I would plan to raise prices, anticipate softer retail sales, and get moving on finding somewhere else to manufacture these products

I would move fast on this, if you haven’t already

CHAD’S ROUND-UP

📚 What I read: What’s Your Dream by Simon Squibb- You may have seen an Englishman on Instagram and TikTok approaching strangers on the street with the line “What’s Your Dream?” When I first encountered it, I thought it was clickbait. Then I discovered this guy is for real. Simon Squibb is an entrepreneur who made a fortune and now spends his life focused on helping others pursue their dreams, start their own business, and leave unhappiness behind. This book is his story and is an inspirational read for reframing your situation and your options.

🎞️ What I watched: It’s Super Bowl week and you know what that means. Brands go all out on creative to capture valuable attention during the most-watched American TV show of the year. So far, amusing nostalgia-inspired ads featuring When Harry Met Sally, Martha Stewart, and Gordon Ramsey have been pre-released. Get out the guacamole. 🥑

🕵🏻‍♂️ An interesting discovery: MO/GO- Let’s say you’re planning to hike Mount Washington or Mount Whitney. Pick your Mount. But you might, you know, get tired. Enter MO/GO. These are motorized pants, created by ARC’TERYX and Google X Labs startup Skip. They help you move. An actually incredibly useful invention for mobility challenged individuals or situations where moving heavy objects is necessary. A little extra spring in your step!

That’s all for today. I’ll see you Friday

I’m rooting for you!

Chad

Work with Me-

If you want to accelerate your business in 2025, I may be able to help. I’ve led $ billion and $ multi-hundred businesses across apparel, accessories, and retail. Book a one-on-one call with me to discuss your business gaps, product strategy, leadership growth.