Yahoo Finance

Consumers are expected to feel the brunt of tariffs. According to a recent report from PWC, the annual total tariff impact for the consumer products industry would increase to $134 billion. That's up from $27 billion per year, hitting all types of goods ranging from apparel to fruits, to vegetables, all the way to your cleaning products. This earning season, we heard from various consumer-facing companies, including the likes of Walmart all the way to McDonald's, about how the consumer is holding up in this environment. Sneaker giant Nike warned the impact of tariffs on imports from China and Mexico will take a toll on its fourth quarter gross margins. General Mills CEO Jeff Harmening cautioned investors that consumer behavior hasn't gotten better.

Coming into this year, we thought the consumer environment would, you know, would improve as the year got on, and that hasn't really been the case. And and consumers are still seeking value as much or more than they had, you know, when our fiscal year began. And the situation we find ourselves in is different than we thought the one coming into the year. And so consumers are are seeking value. We see that in the categories they're pursuing in in in many, many ways.

Meanwhile, Walmart was among the first to share how it plans to manage through tariffs. Walmart CFO John David Rainey told Yahoo Finance, "It's not even immune to tariffs." Even though two-thirds of its goods are produced, assembled, or grown here in the US. The brand is currently working with suppliers, particularly in China, to keep prices low for customers. Department stores Macy's and Kohl's, both of which are in the midst of turnaround strategies themselves, both lowered their outlook citing external uncertainties of the macro environment on both the business itself and its consumers. Meanwhile, Dollar Tree, which has a majority of its sales come from a household income of less than $35,000, said it's not expecting any improvement either. Here's what the CEO said on the call.

With regards to current tariffs that have been announced on products that we sell, we believe we are well positioned to mitigate the impact in 2025. We were able to successfully mitigate the tariff impact in 2018 and 2019, though we did take retail price increases in some instances along with others across the industry. Given the already stressed financial condition of our core customer, we are closely monitoring these and any other potential economic headwinds, including any changes to government entitlement programs.

And lastly, fast food. Shares of McDonald's and Yum Brands have actually slightly outperformed the S&P 500, as investors believe consumers will turn to value meals. Taco Bell shared its plans to increase its value mix from 13% to 18% at its recent investor day.

Thanks so much for breaking this all down. Appreciate it.