The first few months of 2025 have been interesting, to say the least, for the American retail sector. Economic uncertainty was already rising for a whole host of reasons, and then came tariffs on imports from basically every non-U.S. country and territory.
With a minimum duty of 145%, imports from China have been especially hard-hit.
Will it last? No one knows. For now, investors like Steve Streit, whose venture capital firm backs a number of retail startups, recommend leaders in the space to take a strategic, risk-aware approach.
“Now, more than ever, retail businesses need to think strategically about sourcing and sales,” he says.
Here’s where Streit advises retail leaders to begin.
- Understand Your Exposure
First things first: understanding your company’s exposure to supply chain risk.
In 2025, the most important form of supply chain risk is tariff exposure. That is, the import duty your company (or its supplier) must pay to bring in a particular product from its country of origin.
Tariff exposure is also a function of sales data, Loop Returns SVP of Product Kristin Kelly tells Forbes. If Product A comes from a lower-tariff country than Product B, but you sell a lot more of A than B, A is a bigger overall risk.
That’s why “brands need to identify affected products based on country of origin and historical sales data,” Kelly says.
- Determine What Your Business Can Do Without (If Anything)
When supply chains are volatile, as is the case today, your business may need to discontinue the highest-risk products, at least temporarily, Streit says.
“High-risk products — those with high return rates, low resale value, or complex reverse logistics — require careful evaluation to minimize financial exposure,” agrees Kelly.
Even if you can pass along the full cost of the risk to your customers, you may lack the personnel or expertise to manage that risk effectively. Better to do without a marginal SKU than try to make it work.
- Renegotiate Logistics Contracts (Or Switch Third-Party Logistics Providers)
When times get tough, businesses renegotiate. This could be your next best move after chucking products that don’t make sense to sell any longer.
Of course, renegotiating fulfillment contracts is a tricky and time-consuming endeavor. You have to have some conviction that uncertainty will last long enough to make it worth your while; otherwise, the cure could be worse than the disease.
An alternative, says Streit, is to switch logistics partners if you’re able. Put your team on the case, if you haven’t already.
- Look for Alternative Suppliers
If switching logistics providers isn’t possible right now, try looking for alternative suppliers for the same or similar products instead.
Believe it or not, simply searching for “[product] manufacturers near me” can do the trick, according to Shopify. The United States and other “friendly” countries have a surprising number of homegrown manufacturers that are suddenly cost-competitive in the “new normal.”
- Pivot to More Cost-Effective SKUs
Willing to pivot? Consider changing up your product mix to add new, lower-risk SKUs. In the past, some larger retailers have responded to trade-related and broader economic uncertainty by introducing entire new product lines, most often “discount” or “value” offerings that cost less to source than existing alternatives.
- Change Up Your Marketing or Channel Strategy (Or Both)
Sales and marketing are big expenses for retail businesses in the best of times. And when uncertainty rises, the ROI for traditional marketing and sales channels often takes a hit.
To protect your business, shift away from more costly channels, even if they still seem to be working. Instead, look at more cost-effective alternatives, especially those that leverage existing customer or supplier networks.
Shore Up Your Supply Chain Strategy
Sometimes, fortune favors the bold. Other times, it’s best to keep your head down.
The current, highly uncertain environment would appear to favor retail businesses that keep their heads down.
However, it might not be so simple. Successfully navigating the pitfalls that 2025 has already brought, and those still to come, may demand bold action — like finding a new manufacturer for your best-selling product line or renegotiating supply contracts on the fly.
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