Winter has yet to come: still waiting for tariff effects?
The US retail sector had a surprisingly strong year, with Black Friday and Cyber Monday sales are likely to hit a new record this year. Advance Census Bureau data show that retail and food service sales in September grew 4.3% year-on-year, putting the industry on track for its best performance since 2022. This is attributable to frontloading before tariffs kicked in provided a strong head start, supported by lower interest rates, solid jobs and contained inflation.
Meanwhile, rather than bringing in a flood of production back onshore, US companies are recalibrating their global footprint, expanding into strategically located, lower-cost markets to preserve competitiveness and hedge future trade risk while also reducing their exposure to China (US imports down 36% since April). In the toy and apparel industries, for example, demand is shifting from China to Vietnam and other Asian countries like Cambodia and Indonesia.
Main categories except electronic goods and building materials all saw a strong rebound
Despite fears of rising import-tariff pressures, US consumer spending on discretionary goods has shown a striking decoupling this year: most categories are registering solid growth, except for electronics and building material revenues are contracting on a year-to-date basis, while gasoline station spending is down sharply (largely due to lower oil prices). Sport and music goods are also lagging, but still managed a modest YTD growth of roughly 1%.
Furthermore, traditional import-sensitive categories such as apparel, furniture and vehicles are rebounding strongly: retailers report that they have cleared excess inventory and offered generous discounts, and many manufacturers (especially in autos and apparel) have absorbed early tariff-related cost increases, prioritizing higher sales volume over margin protection. General merchandise and food & beverage outlets have also posted resilient YTD growth of 2.5-3%, reflecting their typical stability in inflationary environments.
Overall, US retail sales expected to grow by 3% over 2025-2027
After a strong start to 2025, momentum is expected to cool in the second half as earlier frontloading of purchases fades, while higher prices and emerging signs of labor-market softening curb demand. Having said that, a full-year growth rate of around 3% can be expected, broadly matching last year’s performance. At the same time, a moderately softer job market alongside stable US GDP growth of around 2% should continue to support overall demand. While inflationary pressures likely to remain contained and near 3%, the impact of tariff increases are proved smaller than initially feared, thanks to trade deals and companies’ efforts to adapt supply chains and inventory strategies.
