US tariffs will hit its own consumers. Retailers and suppliers are bracing for impact.

Washington and Wall Street have been in turmoil for nearly a month over President Donald Trump’s tariffs, and the fallout is now approaching US households. Retail giants like Walmart and Target warned Trump last week of looming shortages and higher prices, Bloomberg reports.

The tariffs hit during a crucial inventory buildup season for back-to-school and holiday sales, forcing retailers to choose between canceling orders, raising prices, laying off workers, or facing empty shelves and financial strain, the business news service writes.

Shipping disruption deepens: Since the US raised tariffs to 145% in April, cargo shipments from China have dropped by up to 60%, with overall volumes down 40%, according to Bloomberg data. Bookings for standard containers were 45% lower by mid-April, the Financial Times reports, citing Vizion data.

As it stands, the World Trade Organization projects that US-China trade could fall by 80%, fueling recession fears. US imports are expected to drop 7% in 2Q — the steepest fall since the pandemic.

Damage management window closing: Huge retailers have been pausing orders from suppliers outsourcing their products from China and are expected to cancel them if the standoff remains, Jay Foreman, CEO of toymaker Basic Fun, told Bloomberg. “We’re in a period where the damage is manageable, but every week the damage level is going to increase,” he was quoted as saying by Bloomberg.

Rising prices are dragging consumer spending down, with consumer confidence weakening, Momentum Commerce CEO John Shea told the Financial Times. Some executives anticipate consumer goods prices could double, further tightening sentiment and spending, Bloomberg writes.

To mitigate the tariff impact, importers are shifting sourcing to Southeast Asia, with rising exports from Cambodia, Thailand, and Vietnam. Container prices are already rising from Vietnam but falling sharply on China – US routes, data from the cargo booking platform Freightos shows.

BUT- Unlike the Covid era crisis, a rapid resolution is still possible if tariffs are quickly removed, executives noted. However, any sudden trade rebound could overwhelm logistics systems and creating new bottlenecks, Judah Levine of Freightos told Bloomberg.

IN CONTEXT- Washington and Beijing have granted minor tariff exemptions for select products, with Trump suggesting the 145% rate could “come down substantially.” However, no formal negotiations are underway, and industry leaders warn that higher baseline tariffs — possibly locking in at 10% — could permanently raise costs, worsening the squeeze on businesses and consumers, said Secretary-General of the International Chamber of Commerce John Denton.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with Japan’s Nikkei unchanged, while Hong Kong’s Hang Seng is down 0.5% and Shanghai Composite is down 0.1%. Meanwhile, Wall Street futures are signalling a lower opening, after markets were boosted yesterday by the US hinting at a trade agreement to be finalized soon with an unnamed country.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.3% yesterday on turnover of SAR 6.9 bn. The index is down 2.4% YTD.

In the green: Alarabia (+9.9%), Albaha (+4.9%) and Sumou (+3.9%).

In the red: Alistithmar Reit (-3.4%), Tadawul Group (-2.9%) and Saudi Kayan (-2.8%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.3% yesterday on turnover of SAR 29 mn. The index is down 10.0% YTD.

In the green: Mulkia (+6.8%), Leaf (+4.0%) and Alashghal Almoysra (+3.7%).

In the red: Qomel (-6.7%), Enma Alrawabi (-4.6%) and SMC (-4.4%).

CORPORATE ACTIONS-

Kingdom Holding’s BoD recommended transferring its full statutory reserve of SAR 1.8 bn to retained earnings based on its 2024 audited results, according to a disclosure to Tadawul. The proposal will be put to a vote at the next general assembly.

Arabian Pipes received the Capital Market Authority’s approval to increase its capital by 33% to SAR 200 mn through tapping its retained earnings, with shareholders getting a bonus share for every 3 shares owned, according to a statement. The company must secure its shareholders’ approval and all regulatory requirements within 6 months.

Nomu-listed Balady Poultry’s top brass decided to avoid distributing dividends for 2H 2024, according to a disclosure to Tadawul. The decision, which aims to support the company’s expansion plans, is yet to be approved by its general assembly.

Tadawul-listed Taqat Mineral Trading tapped Al Rajhi Capital as market maker for the company’s shares for 12 months, according to a disclosure to Tadawul.