Global retailers' tariff strategy risks spreading pain beyond US consumer

Global retailers including sandal maker Birkenstock and jeweller Pandora are looking at spreading the cost of US tariffs by raising prices across markets to avoid big hikes in the United States that could hurt sales.

- 

A global presence gives large retailers an advantage to minimise higher tariff costs in the US. But it is putting central banks on watch as the strategy could fuel inflation in other markets like the European Union and Britain, where consumer prices have finally started to stabilize.

Birkenstock’s chief financial officer said last week that a “low-single-digit” price increase globally would be enough to offset the US tariff impact.

Pandora Chief Executive Officer (CEO) Alexander Lacik said the Danish company is debating whether to raise prices globally or more in the US, its biggest market.

“Companies are really thinking about distributing the tariff,” said Markus Goller, partner at consultancy Simon Kucher in Bonn, Germany. “A manufacturer from outside of the US might say, OK, I cannot increase my prices to the US market that much, so I will do a little increase in the US, and a little increase in Europe, and in other markets.”

US President Donald J. Trump has imposed a blanket tariff of 10% on all global imports and is threatening higher so-called “reciprocal” tariffs on its trading partners.

When US behemoth Walmart said it would have to raise prices in response to tariffs, Mr. Trump ordered the world’s biggest retailer via social media to “eat the tariffs.”

Announcing price increases in non-US markets could be a way for retailers to avoid a similar backlash from Mr. Trump.