Trump Wins, But Does Retail Lose? How Trump’s Victory May Impact Prices

Former President Donald Trump, now president-elect after his victory in the Nov. 5 election and set to serve a second term, has made more than a few promises regarding his economic policies.

Among these: a 60% tariff on all Chinese imports and a universal 10% tariff on imports from all countries, per Fortune. If Trump does follow through on this campaign pledge, what exactly does this mean for a retail sector that is heavily involved with imports?

Larger Companies May Weather Tariffs More Easily

According to Barron’s, larger retailers such as Amazon and Walmart will be able to navigate potential tariffs more gracefully due to economies of scale. When it comes to passing on price increases, the size and flexibility of companies in this category could mean lesser price hikes for their consumers — largely because Amazon and Walmart can source from other suppliers and negotiate better prices more easily than smaller competitors might.

John Tomlinson, global director of research at analytics firm M Science, indicated that these industry giants may have an easier time than members of other retail sectors — namely dollar stores, sporting goods stores, and home furnishing stores — in terms of “more easily pass[ing] on the added fees than others.” Five Below, Dollar Tree, and Dollar General stocks dropped a significant 10%, 7%, and 5%, respectively, following news of Trump’s win, despite an overall market surge.

Some experts signaled for calm in the face of potential tariffs, including Johns Hopkins business professor Tinglong Dai. Dai told Business Insider that retailers had endured previous waves of tariffs in the past with modest disruption to the supply chain or the price of goods.

“Retailers have become incredibly adept at absorbing these frictions,” Dai said.

Trump Tax Cuts Could Mean More Money in Consumers’ Wallets

On the other hand, while tariffs generally mean higher sticker prices on store shelves, the continuation of — and perhaps enhancement of — Trump’s previous tax cuts could be a boon to consumers and retailers both.

GlobalData retail analyst Neil Saunders told Business Insider that while the talk of tariffs was “causing a lot of nervousness” in a broad sense, Trump’s proposed tax scenario may pay off.

“The whole of retail is very dependent on the middle class and what you can eke out of their spending levels,” Saunders suggested.

Any cut in the corporate tax rate would also benefit retailers — and Trump plans to cut these taxes, per Fortune — though it remains in question whether decreased corporate taxes might result in lower prices for consumers.

Conversely, as Fortune writer Alena Botros outlined, several economists have suggested that Trump’s tax policies would be inflationary in nature, removing any real money advantage consumers might attain via lower taxation.

Trump, Immigration Policy, and the Retail Sector

Finally, will Trump’s proposed crackdown on illegal immigration, and tightening of legal immigration procedures, widely impact the retail sector?

While a recent Pew Research study suggested that relatively few retail industry workers are in the country illegally — and thus a deportation effort may not hamper staffing as much as believed — a tightening of current immigration policies concerning the H-1B visa program for skilled workers could harm certain retailers on the tech staffing and operations side.

“That’s actually very unhelpful for a lot of retailers, especially in areas like technology, which a lot of retailers are involved [in],” Saunders offered.

Beyond considering staffing levels, a concerted deportation effort may have a negative impact on retail business in the larger view.

“Everyone’s going to feel the brunt of that,” Chris Walton, a former Target executive, told Business Insider. “If that were to happen, it’s a tough thing to prepare for because the collateral damage from it could be pretty expensive.”