Texas stores are bracing for tariff costs — and shoppers could bear the price increases.
Nearly three in four retailers and wholesalers expect higher tariffs to deliver a negative effect this year, according to a survey at the Federal Reserve Bank of Dallas. Of those respondents, more than 75% expect to pass on those costs to consumers.
The report is another signal of the increasing concerns that new fees on global trade pose for stores and their shoppers. Retailers, even amid the confusion and uncertainty, are trying to navigate a new environment that could upend their operations.
“They know that they operate on razor-thin margins, many of them, and this can make or break their performance,” said Venkatesh Shankar, professor of marketing at Southern Methodist University. “They’ll be very concerned.”
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Texas retailers and wholesalers don’t see eye-to-eye on how much of the costs they will pass on to customers — with 32% saying they would add “all” increases. The same percentage said “most,” and another 32% said “some,” according to the survey conducted in April.
Yet the timing of those new prices for customers varied with two in five saying they would do so in less than a month after the tariffs take effect — and the same ratio said one to three months. Meanwhile, 12% said “upon tariff proposal/announcement,” according to the report.
“I think for shoppers, we have already been forewarned,” Shankar said, adding that consumers have been buying products of late to get ahead of tariffs.
Still, it could be tougher for lower-income folks who live paycheck to paycheck, Shankar said. They don’t have the extra income to bulk up ahead of any tariff hits.
In the Fed survey, retailers also responded to the question “About what share of inputs into your products or services do you source from outside the U.S.?” The percentages varied with less than 12% saying 0% — while nearly 19% said 76% to 100%.
Companies may grapple not just with prices, but also with managing supply chains. And that’s not a simple task when so much is unknown, Shankar said. Some have tried to manage inventories by buying items in advance, a buffer until there’s clarity on what just might happen.
The costs and headaches will be easier for larger industry players.
“The bigger retailers can afford to wait a little bit and try not to take the price increase,” Shankar said. “They’re very sensitive and cautious about it.”
