IT'S VERY TAXING

Today, retailers and brands across America are doing emergency scenario planning

Yesterday’s announcements on tariffs brought both clarity and uncertainty

It’s much worse than we thought, your product costs are increasing by a lot

The smorgasbord of country-specific tariffs will layer onto the current array of category-specific duty rates and existing free trade agreements (do they still even apply?)

Executives and merchants will have to make difficult choices to balance revenue and profit plans with maintaining consumer loyalty

This puts every option on the table- creativity in sourcing and product engineering with alternative materials, moving country of origin to lower tariff countries, rebalancing buys, canceling orders, and price increases

➡️ CEOs: Now is the time to remove earnings guidance for the year

Your stocks will already take a hit this week

Removing guidance will do little additional damage and will provide the necessary cover to manage through this

Holiday season is ahead, just 2 quarters away- it’s impossible to forecast with certainty

Now is not the time to cut back on marketing or high-visibility partnerships

As consumers make choices to spend discretionary dollars in budgets stretched by inflation, you need your brand to be top of mind

➡️ I’ve merchandised and sourced through the old quota system, cotton shortages, recessions, U.S. dollar booms and busts, oil shocks, the global financial crisis, and COVID

I’ll say this- there is no battle-tested playbook for this

No HBR case study or Bain white paper is going to help

The U.K.’s protectionist Brexit or the 1970s stagflation results may be most comparable

You just have to do your very best with the information that you have

➡️ Over the long term, the American economy is very resilient

In the short term, there will be challenges as costs and prices in the marketplace go up

This didn’t have to happen, but here we are

Archbishop Desmond Tutu said “a fundamental principle of humanity is that we are one common family and what I do to you I do to myself.” It seems particularly relevant today

If you’ve got tips on how you’re managing your Tariffs strategy, please let me know in the comments!

That’s all for today

I’m rooting for you!

Chad