cursor chemicals into the United States. Some retailers, like ELF Beauty, The Home Depot and Procter & Gamble, have already been steadily reducing their reliance on China since as far back as 2019. Meanwhile, other retailers are trying to respond to these additional costs with arguably more slapdash measures, such as frontloading imports and stockpiling inventory ahead of the implantation of the tariffs.  While this tactic is effective in avoiding higher import costs, John Mercer, Coresight’s head of global research, commented that it could also drive up freight rates amid demand spikes. Additionally, Coresight analyst Aditya Kaushik noted that, on the demand side, consumers will “remain wary of price increases due to the tariffs, which could lead to reduced spending on discretionary categories in the medium term”, essentially defeating the purpose of retailers attempting to stockpile in advance.  If they haven’t already started prepping well in advance of the tariff shifts, retailers need to be especially cautious as they decide on the next steps.  Missteps to avoid while dealing with incoming tariffs  Global Data’s managing director, Neil Saunders told Inside Retail that the biggest mistake retailers can make “is to act in haste”. “The tariffs landscape is one that is constantly shifting,” the retail analyst observed, “and there seems to be no settled policy. As such, while retailers need to be able to act nimbly, they should also take their time to consider what moves are best.” Coresight’s Mercer cautioned that retailers should not assume that these tariff changes will eliminate or dramatically reduce the competition from emerging challengers, such as Shein and Temu, or cross-border peers, such as AliExpress and other alternative channels such as TikTok. While retailers and marketplaces that rely heavily on imports from China, Canada and Mexico, such as Shein and Temu, are expected to face the challenge of higher costs and lose advantages conferred by de minimis exemptions on import duties, this will not reduce their edge as competitors.  “We would expect them to continue to be price-aggressive, with prices on Temu likely to continue to be subsidized by parent company PDD Holdings and with greater resilience instilled by a diversification of their businesses through onshore and nearshore distribution, an onboarding of local sellers and (in Shein’s case) a move toward a third-party marketplace model,” Mercer said. “Moreover, in a context where the wider mass market will face some additional tariff costs, we expect rock-bottom retail companies to remain rock-bottom,” he said, referring to companies that offer extremely low or the lowest possible prices for retail goods or services. How retailers should move forward with incoming tariffs “Retailers need to work through the cost implications of tariffs to understand how they will manage this,” Saunders advised. “It’s not as simple as just passing on the costs to consumers as the demand environment may not support that.” Rather than looking at short-term solutions, like frontloading imports or increasing product prices, which may turn consumers off, Coresight’s Kaushik recommends that retailers invest in long-term strategies, including: Dual sourcing from China and other regions This will “likely be a more manageable approach for manufacturers and retailers, as establishing a mix of domestic and various international suppliers would spread the risk and manage costs effectively,” Kaushik explained.  Manufacturing in foreign-trade zones Foreign-trade zones, also known as free-trade zones (FTZs), are another potential safety net against the new tariffs, as these zones are secure areas located near US ports of entry but are considered outside of the territory of US Customs for tariff purposes. This means, that imported products that are stored, processed or re-exported from an FTZ without entering the US market are not subject to any duties. Not to mention, for goods entering the US market, customs duties are deferred until goods leave FTZ. Upon entering the US market, lower duties are paid compared to directly importing the products from foreign countries. FTZs also often provide better inventory management options, allowing companies to store stock without immediately incurring tariffs,” Kaushik commented.  Tariff engineering This is a strategy in which the manufacturers of certain products can alter the product design or assembly to classify products under lower-duty tariff codes, resulting in cost savings, another helpful approach for reducing the impact of tariffs.  However, changing a product’s design or assembly is often costly and time-consuming, Kaushik cautioned, offsetting some of the savings earned. Finally, the Coresight analyst recommended that retailers and manufacturers should look to create partnerships with domestic suppliers, acquire smaller businesses that offer in-house production capabilities or enter joint ventures with companies in tariff-exempt areas to ensure supply continuity.