A wave of disappointing earnings reports from major US retailers is the latest sign that American shoppers are tightening their belts, with rising prices and new trade tariffs starting to bite.
Retailers including McDonald’s and Harley-Davidson reported lower-than-expected performance this quarter, citing weakening demand and cautious spending behaviour. Executives say consumers are pulling back, especially on non-essential items, as they face the combined pressure of inflation and higher costs on imported goods.
Much of the strain stems from the Biden administration’s continuation of tariffs on Chinese imports, as well as the recent rollback of the “de minimis” threshold that allowed small parcels from abroad to enter the country duty-free. That rollback is pushing prices higher for products ranging from apparel to electronics, a change that’s beginning to show up in quarterly earnings.
Some companies are also dealing with increased inventory and logistics costs, putting further pressure on margins. Several brands are looking to renegotiate supplier contracts or shift sourcing strategies in an attempt to stay competitive.
Fast food retailer McDonald’s surprised onlookers by posting a decline in its quarterly global sales on Thursday, claiming the “toughest of market conditions” was to blame.
Meanwhile, cosmetic brand Estée Lauder also posted a larger-than-expected fall in its 2025 fiscal sales, which has been amid a flurry of companies pulling their forecasts given the turbulent macroeconomic sector.
The brand admitted its US sales had fallen mostly by a fall in “consumer confidence and sentiment,” which had caused a drop in stock levels.
While the long-term impact of these trade changes remains uncertain, the short-term picture is clear; US retailers are feeling the heat, and shoppers are growing more price sensitive.
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