Inflation cooled in February to 2.8 percent, but apparel prices inched up 0.6 percent.
Overall, the Consumer Price Index rose just 0.2 percent in February, seasonally adjusted, which was below the 0.3 percent expected by most economists and below the 0.5 percent rise in January. And while that was good in general for both consumers and businesses, many are now worried about another spike in inflation as U.S. President Donald J. Trump’s tariff threats begin to get implemented.
Consumers in particular were more pessimistic over future business conditions, which drove the decline in The Conference Board’s Leading Economic Index in January. That was in-line with The Conference Board’s Consumer Confidence Index in January, which was down 5.4 points to 104.1. Last month, The Conference Board’s chief economist Dana M. Peterson said the January survey responses showed that assessments of business conditions weakened for the second month in a row. And in February, consumer confidence fell again, with the Consumer Confidence Index down another 7 points to 98.3. Stephanie Guichard, The Conference Board’s senior economist, global indicators, noted that last month’s survey responses reflected a “sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019.”
Not only are prices for consumer goods expected to go up, but retail trade organizations have expressed concern about how tariffs impact U.S. firms and American consumers.
The Retail Industry Leaders Association (RILA) on Tuesday filed comments with the Office of the U.S. Trade Representative (USTR) regarding the review of unfair trade practices and possible application of reciprocal tariffs. While the comments indicate support for holding U.S. trading partners accountable, RILA’s position is that if USTR’s investigation concludes that reciprocal tariffs are the appropriate remedy to address other countries’ unfair trade practices, the USTR should ensure that any remedial measures don’t harm U.S. companies or family budgets, according to the letter Blake Harden, RILA’s vice president, international trade, wrote to U.S. Trade Representative Jamieson Greer on Tuesday.
“In short, we urge extreme caution in the use of tariffs to address unfair trade barriers to ensure that household budgets are not further squeezed by cost increases. Instead, we urge USTR to focus on negotiating with our trading partners to reduce trade barriers to U.S. goods and services,” Harden wrote.
He also said that Trump’s first term included the U.S-Mexico-Canada trade agreement, which he said can be viewed as a blueprint for success by setting clear rules that also protect American workers. Harden urged the Trump administration to “seek agreements with other countries to reduce trade barriers and expand market access for U.S. goods and services rather than driving up costs on household goods through broad-based tariffs.”
Retailers and apparel firms are hard at work trying to figure out how to share the costs from the increase in tariffs in order to keep prices low for consumers. Tractor Supply CEO Hal Lawton has said he will dust off his 2018 playbook from when Trump first imposed tariffs on goods during his first presidential administration. “It’s roughly kind of a third, a third, a third. You’re putting some of it back on the manufacturer, we’re finding some ways inside of our P/L to offset the impact of the tariff, and then some maybe pass along to the customer as well,” Lawton said.
And Steve Madden CEO Ed Rosenfeld last month said during the company’s earnings conference call that his firm is already in talks with factories on price concessions. He didn’t rule out the possibility of selective price increases that could be implemented this fall.
But not all companies are assured of success in talks with suppliers. Talks are on a case-by-case basis, which sets the stage for higher apparel prices later this year if the request for price concessions go nowhere. For anyone dealing with low-cost providers in the mass channel, there are indications that they could be encountering some pushback from Chinese vendors and even the Chinese government.
Walmart earlier this month tried to get its upstream vendors in China to reduce their prices. Bloomberg noted that those vendors were not in the mood to acquiesce to the mass discounter’s request for a 10 percent price reduction.
Kim Glas, president and CEO of the National Council of Textile Organizations, she in an interview with SJ in January that the unit pricing for textile and apparel goods from China “has dropped 50 percent” since U.S. President Donald J. Trump applied Section 301 tariffs back in 2018. “That means that the Chinese are subsidizing their industry to continue having significant market share,” Glas said.
U.S. Treasury Secretary Scott Bessent, in a “Face the Nation With Margaret Brennan” interview that aired on March 2, 2025, said that “China will pay for the China tariffs, because their business model is exporting their way out of this inflation.” Bessent, and the Trump administration, believe that China would continue to flood the market. “They will eat this price decrease. They will eat any tariffs that go on,” Bessent said.
What hasn’t been clear was whether the Chinese government would continue to provide subsidies to maintain market share, particularly since their apparel suppliers have been losing share as American companies sought to source outside of China, moving manufacturing to countries such as Bangladesh, Vietnam and Cambodia.
Apparently the Chinese government is now willing to play hardball in retaliation to Trump’s plan to levy additional duties. Walmart representatives regularly meet with governments to discuss various issues. In one such meeting on Tuesday between Chinese officials and Walmart representatives, a Wall Street Journal report on Wednesday said that officials emphasized that efforts to seek lower prices could violate existing contracts, adding that the possibility of legal consequences is on the table if Walmart insisted on price concessions.
“Walmart’s purpose is to help people save money and live better. Our conversations with suppliers are all aimed at making our purpose a reality for millions of customers, and we will continue to work closely with them to find the best way forward during these uncertain times,” a spokeswoman for Walmart said, adding that the retailer has a “strong business in China.” The discounter operates stores in China under its Walmart and Sam’s Club banners.
