From Percy Pigs to price pressures – what’s the impact of Trump tariffs on UK retailers?

President Trump’s tariff overhaul has introduced fresh challenges for retailers with a significant UK presence, particularly in the fashion sector.

Brands are now grappling with rising costs, disrupted supply chains and shifting consumer behaviour—and these pressures come as UK retailers are already facing £5.6bn in additional costs from the October Budget.

As businesses navigate this landscape, KPMG warns that US tariffs on UK exports could slow GDP growth to just 0.8% in 2025 and 2026, adding to the strain.

Meanwhile, a survey by the British Chambers of Commerce finds that that 62% of UK firms with trade exposure to the US expect to be negatively impacted, with 32% planning to raise prices.

Retail Economics’ Nicholas Found tells Retail Gazette: “The sudden imposition of tariffs injects fresh uncertainty into an already fragile global environment. There are no winners in the immediate aftermath.”

So, how are retailers adjusting—and what does this mean for pricing strategies, operations, and long-term growth?

Cost pressures and pricing responses

With tariffs pushing up costs for fashion brands and consumer goods companies, retailers are facing tough decisions on whether to absorb the financial impact or pass it onto shoppers.

“Retailers are walking a tightrope,” says Found.

“Following the cost-of-living crisis, which has seen the price level rise by about a fifth, retailers are reluctant to pass on further price rises. The reality is though, UK retailers typically operate on margins of only 5% on average.”

RSM UK partner and head of retail Jacqui Baker echoes this view.

“The tariffs announced by Trump would in themselves be a blow to the retail industry, but the timing couldn’t be worse as they collide with post-budget headwinds,” she says.

In this volatile environment, larger players may have more flexibility. Found explained: “Larger, better-capitalised players may be able to absorb some of the tariff impact. But rising cost pressures are likely to accelerate investment in automation and efficiency to mitigate costs.”

For smaller players, the pressure is more acute, with some having to make difficult decisions on price increases to offset rising costs.

Fortnum & Mason CEO Tom Athron also warned that tariffs would push up prices for American shoppers.

Speaking to The Telegraph, he said: “Ultimately it will be the consumer who pays. No one wins in a trade war. All that happens is that prices go up and productivity falls. I think it’s really disappointing that we find ourselves in this situation.”

Lush, which centralised North American production at its Toronto facility last year, cites the 25% tariff imposed by President Trump on Canadian goods as the driving force behind its decision to “pass this tax directly to our American customers” in its latest accounts.

The firm also clarified that there are no plans to establish a manufacturing presence in the US.

Globaldata’s apparel analyst Alice Price warns of significant implications for internationally-focused brands, which could lead to prices rising across their global operations.

She says that “value players like Shein will see their low-cost propositions rocked” and that retailers will “have to find ways to offset these higher costs, and consumers may expect availability issues while they try to navigate these new challenges.”

“It is most likely that brands will either push the additional costs onto US consumers, putting further strain on a region already grappling with inflationary challenges, or increase their prices globally to spread the impact more thinly,” she added.

UBS analyst Jay Sole seconds this view, and says “given how extensive the list of tariffs is, the industry will realise there are few ways to mitigate the impact in the medium term other than by raising prices.”

Operational shifts and strategic responses

Some retailers may accelerate longer term solutions in response to Trump’s tariffs.

 “If tariffs prove to be lasting, UK retailers with significant exposure to the US will need to revisit their export strategies, including diversifying into new markets to find new opportunities or set up localised US operations,” Found explains.

“Those with manufacturing and supply chains touching tariff-hit countries may look at nearshoring or multi-sourcing strategies to boost agility and reduce dependency on single markets.”

In February, reports emerged that Next would be setting up a US corporate entity to handle operations more efficiently, similar to the operation it has established for its EU business.

By doing so, the retailer could reduce its tariff burden by paying duties only on the cost price of goods rather than the selling price.  However, establishing a US subsidiary comes with additional administrative challenges that smaller retailers may struggle to handle.

Waterstones has paused international shipping to the US following Trump’s imposition of tariffs, while Superdry CEO Julian Dunkerton told the Times last month that tariffs make its US business division “unprofitable.”

“We are also worried about shipments with products of mixed origins — like some being from China and some from Turkey — it just becomes a horrible mess,” he explains.

Found emphasises that “scenario planning will be essential” for impacted retailers, which “must model for multiple trade outcomes – from prolonged tariffs to possible retaliatory measures or exemptions. The key is to stay flexible, lean and globally minded.”

While the UK retail industry’s direct exposure to the US remains relatively limited, Found warns that the wider ripple effects—from investor caution to delays in capital investment—could dent longer-term confidence.

“UK retailers won’t make kneejerk decisions, but any prolonged uncertainty will hit sentiment hard,” he said.

Even M&S is weighing its options. Last week chair Archie Norman warned that the retailer’s much-hyped launch of Percy Pig in the US could be scrapped altogether.

Speaking at the Retail Technology Show, he said: “We might have to change our minds,” adding that while tariffs wouldn’t halt international growth, they “could push up prices and make them less popular.”

Global supply chain reactions

The tariffs are creating significant logistical challenges, especially for retailers reliant on goods from high-tariff regions like China, Vietnam, Bangladesh, and Pakistan, where rates range from 30% to 54%.

These added costs are forcing many retailers to rethink their supply chain strategies, particularly those that have built their business models around low-cost imports.

Swiss bank UBS estimates that there will be a 10% to 12% increase in the prices of goods that come from Vietnam—where Nike produces half of its shoes. Meanwhile, Indonesia and China account for almost all of the balance of its trainer production.

Nike’s stock dropped 14% the day after Trump’s tariff announcement, while Apple lost more than $300bn in market value, underscoring the immediate impact on large global players.

H&M is also under pressure. CEO Daniel Erver told Reuters in February that US tariffs would ultimately “come at the cost of the consumer,” as the retailer looks to shift production away from heavily affected markets like China and Bangladesh.

The US, H&M’s second-largest market, is expected to see price hikes as the company adapts to evolving trade barriers.

GlobalData’s Price noted: “Donald Trump’s announcement of new tariffs on all imports to the US will have significant ramifications on the apparel market, especially as major manufacturing hubs like China, Vietnam, and Bangladesh have been hit with rates as high as 54%.

“With the US having the largest apparel market globally, these tariffs will hugely impact global players like Abercrombie & Fitch and Nike, which have very diverse supply chains and import huge quantities into the country.”

Found added: “there’s also a risk of deflected trade flows.

“With Chinese goods now facing steep tariffs in the US, in the short term we could see a ‘dumping’ of low-cost products into the UK market – particularly in fashion, beauty, and toys – exacerbating the already intense price competition from platforms such as Temu and Shein over the past year.”

Luxury sector hit hard

Luxury brands, especially those heavily reliant on the US market, also saw stock drops. Burberry’s share price fell nearly 7%, while Watches of Switzerland also saw a dip.

The US is British luxury’s most important export market, covering 22% (£12.3bn) of total exports.

Walpole CEO Helen Brocklebank admits she is “deeply concerned” about the impact of tariffs on the British luxury sector.

“These tariffs will not only create barriers for UK businesses but also penalise American consumers who value the creativity, craftsmanship, and heritage of British luxury goods,” she explains.

Found points out that the US is the UK’s largest export market outside of the EU for retail and has become increasingly important post-Brexit.

“Tariffs will most likely lead to higher prices for American consumers, dampen US demand, and complicate pricing strategies, particularly for premium brands.” he adds.

Amid the pressures from the post-budget fallout UK retailers now face even more hurdles, needing to adjust their supply chains, explore alternative sourcing, and implement new operational models – all of which has a knock-on effect on consumer confidence at a time when household budgets are already under strain.

“If the uncertainty lingers or tariffs escalate, the bigger risk is a drag on investment and tighter hiring, which risks tipping economies into recession – including the UK, which was already facing weak growth,” warns Found.

Trump has created a global economic outlook which is hard to plan for – but the one thing retailers can expect in the coming months is continued disruption.

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