Tariff Update: May 2, 2025

While many brands are preparing to raise prices for U.S. consumers, sentiment on the ground has already started to reflect growing concerns about a potential recession and sustained inflation. The data is telling: the University of Michigan’s U.S. Index of Consumer Sentiment fell sharply in April 2025, down 32.4% year-over-year. This marks the fifth consecutive month of declining consumer confidence.

In parallel, new figures show the U.S. economy contracted by 0.3% in Q1 2025, another sign that consumer caution is not unfounded.

Today also marks the official end of the de minimis loophole, which previously allowed shipments under $800 to enter the U.S. duty-free. Retailers across the spectrum, from Ssense (shipping from Canada) to Temu and Shein (China), have long built strategies around this exemption. Some smaller brands shipping to US customers, like Danish brand Stine Goya, have even decided to pause
shipments for the time being, until they have a workable solution.

The reality of tariffs in online orders: De La Vali example

This week, reports emerged that Amazon had considered informing consumers about price changes related to new tariff policies. However, the plan was reportedly shelved following increased attention from administration officials.

Nonetheless, as these policy changes and economic signals take hold, we’re beginning to see their ripple effects across sectors and markets. Let’s dive into some of the most recent data.

As we highlighted last week, Shein issued a statement indicating it would raise prices in response to new tariffs, effective April 25. Our data confirms this shift: for example, the average price of t-shirts has jumped 9%, from $23 to $25, overnight.

Average original price – Shein t-shirts in the US market

It’s worth noting that while Shein’s core model relies on high-volume, low-cost goods, the company has increasingly diversified its offering by adding more premium products through third-party partner brands on its marketplace. This strategic shift is becoming visible in year-over-year comparisons within core categories-like t-shirts-where pricing trends reflect both tariff impact and portfolio evolution.

Price Architecture Shein US – T-Shirts

Last week, we discussed Hermès’ intention to fully pass tariff-related price increases onto U.S. consumers. This week, following a disappointing earnings call, Kering followed suit with selective price hikes across key products—including a 9% increase on the Bottega Veneta Jodie bag, which rose from $4,400 to $4,800. However upon closer analysis, these increases appear to be part of routine pricing strategy rather than a direct response to tariffs. Similar adjustments occurred in non-U.S. markets and followed a timeline consistent with past annual pricing cycles.

In recent weeks, there have been reports of shoppers stockpiling goods or accelerating major purchases in anticipation of potential product shortages and significant price increases. To understand where demand is peaking, we analyzed a key group of mid-market retailers to identify categories with the highest sold-out rates.

Top sold out categories over past 30 days – US market

Interestingly, three of the top five sold-out categories were non-apparel, suggesting that consumers may be deprioritizing apparel purchases for now. Instead, they’re likely adopting a wait-and-see approach as uncertainty around the broader economic outlook continues.

As we zoom out, a new question looms large over the global retail landscape: where will those Chinese goods originally meant for the U.S. go? One increasingly likely outcome is that Chinese manufacturers will begin diverting this inventory to other international markets, particularly those with lower or no tariff barriers. If this redirection happens at scale, it could have far-reaching consequences for pricing, competition, and inventory dynamics worldwide.

One of the first ripple effects would be downward pressure on prices. An influx of diverted goods, especially if priced to clear quickly, could create a temporary oversupply in local markets. In regions where these products undercut existing price points, consumers may benefit, but retailers and local manufacturers could find themselves in a squeeze.

This increased competition could also trigger more aggressive discounting, as domestic players scramble to defend market share. The result: compressed margins and an acceleration of promotional activity that could unsettle retail strategies, particularly in sectors already battling soft demand.

For retailers, the implications are strategic. Some may seize the opportunity to source cheaper inventory, while others, especially those reliant on higher-margin local goods, may need to rethink pricing structures and promotional cycles. As these shifts play out, the fallout from U.S. tariff policy may be felt well beyond American borders, reshaping global retail dynamics in unexpected ways.

Watch this space for the latest data and insights on the tariff situation.

Centric Software® (centricsoftware.com)

From its headquarters in Silicon Valley, Centric Software provides an innovative and AI-enabled product concept-to-commercialization platform for retailers, brands and manufacturers of all sizes. As experts in fashion, luxury, footwear, outdoor, home, food & beverage, cosmetics & personal care as well as multi-category retail, Centric Software delivers best-of-breed solutions to plan, design, develop, source, comply, buy, make, price, allocate, market, sell and replenish products.

• Centric PLM™, the leading PLM solution for fashion, outdoor, footwear and private label, optimizes product execution from ideation to development, sourcing and manufacture, realizing up to 50% improvement in productivity and a 60% decrease in time to market.
• Centric Planning™ is an innovative, cloud-native, AI solution delivering end-to-end planning capabilities to maximize retail and wholesale business performance, including SKU optimization, resulting in an up to 110% increase in margins.
• Centric Pricing & Inventory™ leverages AI to drive margins and boost revenues by up to 18% via price and inventory optimization from pre-season to in-season to season completion.
• Centric Market Intelligence™ is an AI-driven platform delivering insights into consumer trends, competitor offers and pricing to boost competitivity and get closer to the consumer, with an up to 12% increase in average initial price point.
• Centric Visual Boards™ pivot actionable data in a visual-first orientation to ensure robust, consumer-right assortments and product offers, dramatically decreasing assortment development cycle time.
• Centric PXM™, AI-powered product experience management (PXM) encompasses PIM, DAM, content syndication and digital shelf analytics (DSA) to optimize the product commercialization lifecycle resulting in a transformed brand experience. Increase sales channels, boost sell through and drive margins.

Centric Software’s market-driven solutions have the highest user adoption rate, customer satisfaction rate and fastest time to value in the industry. Centric Software has received multiple industry awards and recognition, appearing regularly in world-leading analyst reports and research.

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