American shoppers are feeling the heat of Trump's trade war: "Prices are going up."

Source: The Guardian

At a sweltering New York mall, customers say they’re paying more as tariffs push up costs on goods such as t-shirts

As temperatures soared on a sweltering July day in New York City, shoppers at Queens’s largest mall said they were feeling the heat – of rising prices.

“T-shirts, basic tees, underwear, everyday necessities—the prices are going up,” said Clarence Johnson, 48, who was visiting Macy's in the Queen Center mall to pick up shirts he bought online. As Donald Trump continues his trade wars, retailers have been passing on price increases to customers. Department stores, which rely on a variety of imported goods and materials, from shoes to T-shirts, have been especially hard at work dealing with the price fluctuations. At Macy's, signs advertising discounts of up to 60% off the original price were displayed throughout the store, even next to diamond-encrusted necklaces housed in glass cases in the jewelry department. But for some customers, the prices are still too high.

Nydia Olvera, 61, said shopping at Macy's is often out of her budget, but she still goes to the store to check out the clearance section. "I remember they used to have these T-shirts for three dollars. Not anymore," Olvera said. "Now I pay between seven and nine dollars for a T-shirt." A recent study by the analytics firm DataWeave showed that prices for shoes, clothing, and handbags increased significantly from January to June. Shoes have risen as much as 4% and clothing has risen nearly 2% over the past six months. And it's unclear how much higher prices could go. The White House remains in the midst of negotiations with dozens of countries that could face new tariffs of up to 40%. These proposed tariffs are set to take effect on August 1, after Trump delayed the initial July 9 negotiation deadline.

Last week, the Trump administration announced an agreement with Vietnam, the second-largest manufacturer of clothing, footwear, and accessories (the bulk of what is sold in department stores) after China. Under the agreement, Vietnamese exports will face 20% tariffs, half of the proposed 46% tax Trump announced in April. Products made in other countries, such as China, shipped from Vietnam will face a 40% tariff. While retail executives have said the deal is better than the initial tariffs announced, it will still increase costs for retailers. Macy's recently revised its earnings forecast downward, citing uncertainty surrounding the tariffs. The company's stock price is down 25% this year.

Macy's CEO Tony Spring told CNBC in May that some prices will remain the same, but others will be more expensive, meaning the company will have to pass on some of the taxes to customers. Other executives, including leaders at Nike, Target, Best Buy, and Walmart, have similarly stated that they will have to pass on costs. However, retailers are also absorbing costs. Macy's CFO Adrian Mitchell stated during the company's May earnings call that while the company has managed to secure some discounts from suppliers, "we are also absorbing some of that price." Retailers must decide what percentage of the increased costs they can pass on to consumers without losing loyal customers.

It's a tough environment, especially for department stores, which have lost customers to online retailers over the years. Department store sales accounted for just 2.6% of retail sales in 2023, down from 14.1% in 1993, before the rise of online shopping. In Queens Center, some Macy's customers said they haven't yet noticed any price increases, especially when using the company's regular coupons. "The difference isn't much; a little bigger," said Raphaelina Garcia, 33, who was shopping for a dress for an upcoming wedding. "With the coupon, the price is the same [as before]."