Tariffs Add to an Already Uncertain CPG and Retail Market: Circana
While the potential impact of the Trump administration’s tariffs has been the focus of most business news in recent weeks, Circana chief retail advisor notes that they are just the latest source of uncertainty to rattle consumers, who still haven’t recovered from the disruptions caused by the 2020 COVID-19 pandemic.
As of April 7 at 12 p.m., the state of tariffs:
On April 2, President Trump said he would impose individualized reciprocal higher tariffs on countries with the largest trade deficits with the U.S. All other countries will be subject to the original 10% tariff baseline, taking effect April 9, according to the White House.
On April 7, President Trump issued China an ultimatum: Rescind the retaliatory tariffs on the U.S., or get hit with additional tariffs of 50% beginning April 9, per the New York Times.
“Dynamic shifts in consumption are already occurring across consumer groups and retail segments,” Cohen said in a statement. “The consumer is in a state of confusion and trying to decipher how to prioritize their purchases in an environment of significant change.”
Wages haven’t kept up with the price hikes in consumer goods since 2020, with general merchandise costs averaging 25% higher in 2023 than 2019 levels. Prices came down a bit in the fourth quarter of 2024, but they were still 17% higher on average than before the pandemic, and demand was 7% less. Consumers are both postponing purchases and switching their spending to private label or value brands.
Also read: Circana Said Rising Price Sensitivity and E-Commerce Growth are Reshaping Retail
The behavioral shifts are more acute for Hispanic consumers, whose spending declines accelerated in the second half of 2024 and 2025 to drop below the demand from non-Hispanic consumers for the first time in two years.
Extreme weather can be a boon for some brands — with sales in cold-weather categories surging in January thanks to frigid temperatures — but it overall tends to hurt normal spending patterns. Circana attributes double-digit sales declines in the Gulf Coast region in January to record-breaking snow, while winter storms and wildfires caused a 3% dip in year-over-year spending in Southern California.
“Unexpected events create unexpected needs and put added pressure on consumers,” said Cohen. “As more uncertainty and new dynamics enter the picture, the consumer has made it clear that they will not continue to spend in their usual way.”
