From Chicago and New York to London and Geneva, global retailers are rewriting their pricing playbooks as they confront the fallout from tariffs the U.S. government has already implemented. Companies such as Birkenstock and Pandora are leading the charge by raising their prices within the U.S and beyond America’s borders. This maneuver would fundamentally shift the financial burden of tariffs to consumers around the world, instead of just American consumers.
It all got a lot worse after President Donald Trump of the United States declared a universal tariff of 10% on every import into the U.S. He has even threatened to break those agreements and substitute his own higher “reciprocal” tariffs on trading partners. Large retailers like Target and Walmart have already warned that they will be forced to raise prices because of these tariffs. Trump has been publicly calling on Walmart to take these costs on their own chin.
Given the pace of these changes, the retail environment is experiencing both negative and positive reactions. More retailers are deciding to price high in markets where shoppers are not as willing to accept cost increases. Some are making calculated moves to avoid raising prices abroad entirely. Dynamics of global retail like never before at this time as companies strategically steer through these precarious economic waters.
Price Adjustments and Retail Strategies
Perhaps unsurprisingly, Birkenstock and Pandora are two of the retail companies that have chosen to raise prices in across their respective markets. In doing so, they hope to counteract the cost burdens on their business created by U.S. tariffs. This move is indicative of a larger trend, as companies attempt to spread the implementation costs of tariffs around the world.
Adidas CEO Bjorn Gulden stated, “There is no reason to raise prices outside the US because of the tariffs.” His view offers some insight into the retailers’ response which are choosing to not raise prices in foreign markets. He points out that the tariff discussions have targeted only the U.S. in terms of market segmentation.
Retailers who operate as true global enterprises are thus able to use their international operations to mitigate the impact of U.S. tariffs. Jason Miller, a professor of supply chain management at Michigan State University, explained how global firms can manage pricing more effectively, stating, “Maybe a US-only firm has to raise (US) prices by 12%. But you, as a global firm, raise prices by 8% because you can play with pricing in other markets.”
This ability to adjust pricing based on regional market conditions allows large retailers to absorb some of the tariff-related costs while maintaining competitive pricing for consumers.
Economic Implications of Tariffs
In April, inflation expectations among U.S. consumers skyrocketed to 6.7%, hitting the highest mark since 1981. Because of this, retailers are starting to become more aware of the detrimental economic effects their pricing strategies can cause. According to the European Central Bank (ECB), the growth in retail prices continues to be weak among European firms. This is in sharp relief to the increasing costs experienced here in the U.S.
Isabel Schnabel’s, a member of the ECB executive board, reminded critics that companies are often quick to increase prices. They’re doing this not only on products affected by tariffs, but on totally unrelated products to make up for their higher input costs. The strategy indicates what has long been a modus operandi in retail—a place where companies, in times of uncertain economic and consumer conditions, chase profitability.
Markus Goller, a partner at consultancy Simon Kucher in Bonn, Germany, commented on the considerations retailers face regarding tariffs, stating, “Companies are really thinking about distributing the tariff.” He elaborated on how manufacturers might adjust prices across various markets: “A manufacturer from outside of the US might say, OK, I cannot increase my prices to the US market that much, so I will do a little increase in the US, and a little increase in Europe, and in other markets.”
Consumer Awareness and Market Dynamics
The complexity of explaining tariff-driven price increases makes it difficult for consumers to grasp the cost structures of products they purchase. Hal Singer, a professor of economics at the University of Utah, emphasized this issue, saying, “It will be very difficult for a firm’s customers to know what portion of the product’s total costs are subject to the tariff.” He cautioned that such an imbalance of information could lead to a predatory environment.
Filling in the gaps Sooner or later, retailers will exploit the confusion by raising prices claiming they are paying more because of tariffs. Like we saw at the beginning of COVID, ” Singer said, referring to how past examples can dictate current approaches to pricing.
Jean-Pierre Dubac, a professor of marketing at the University of Chicago Booth School of Business, shared insights into how retailers might navigate this landscape. He stated, “Obviously if your products coming into the US are now subject to tariffs, then math says that you have to raise your prices in the US.” He cautioned against being perceived as unfairly raising prices due to tariffs alone: “You don’t want to be accused by the White House of raising prices purely because of US tariffs.”
