The Unspoken Crisis in Retail
As the holiday season approaches, the retail industry faces what former Sears Canada CEO Mark Cohen describes as a “catastrophe personified” – the cumulative impact of escalating tariffs that have quietly infiltrated every layer of the supply chain. While corporate America remains largely silent, industry experts warn that the temporary measures that protected consumers through back-to-school season have expired, leaving retailers exposed to the full brunt of trade war consequences.
The Silence of Corporate Leadership
According to Cohen, who now directs Columbia Business School’s retail studies program, CEOs of major retailers are operating from a position of fear rather than leadership. “Few in industry are speaking out loud about this, for fear of retaliation, which is a form of cowardice,” he told Fortune. This corporate timidity comes despite what Cohen characterizes as widespread panic behind the scenes, with retailers and manufacturers frantically rewriting forecasts, protecting margins, and renegotiating supplier contracts under unprecedented pressure.
The situation has become particularly challenging for smaller players in the industry. As recent industry analysis confirms, the retail sector is experiencing mounting pressure that disproportionately affects small to medium enterprises, creating what Cohen describes as a “deadly COVID-19-like-crisis” for these vulnerable businesses.
Supply Chain Time Bomb
Unlike traditional taxes that consumers see at point of sale, tariffs strike much earlier in the product lifecycle, creating what Cohen calls a “hidden time-bomb” within the U.S. economy. “Almost everything we consume is being burdened with these taxes, with these tariffs that he’s created,” he explained. “What Trump has done is created a burden on every element in the supply chain.”
The financial mechanics have shifted dramatically, with companies now required to front tariff payments before goods clear customs. This change has triggered liquidity crises across “tens of thousands” of smaller importers who lack the financing structure to support what Cohen terms “incremental, sudden, inflated cost of doing business.” These financial pressures are part of broader market trends affecting multiple sectors simultaneously.
Value Retailers Buckle Under Pressure
Even established value retailers are showing signs of strain. IKEA, long celebrated for its price stability, recently increased prices on a bedroom set by $90 within two months. For a retailer that depends on younger and lower-income demographics, such price increases represent a significant brand risk. Cohen sees this as a telling indicator: “If IKEA is raising prices, it’s a signal that tariffs are affecting everyone. There’s no one who can shelter from this.”
The impact extends beyond traditional retail into related innovations in consumer technology and monitoring systems, where supply chain disruptions are creating ripple effects across multiple industries.
Consumer Impact and Economic Consequences
While consumers have so far absorbed the incremental costs – with Bank of America reporting a 0.6% year-over-year spending increase in September – the true impact is only beginning to surface. Standard & Poor’s estimates companies will incur at least $1.2 trillion in additional costs this year due to tariffs, with large retailers absorbing $907 billion of that burden. Approximately $592 billion of these costs are being passed directly to consumers through price increases.
Cohen warns that rising prices will inevitably suppress demand, causing businesses to slash orders during the critical holiday season. This could trigger layoffs and accelerate economic slowdown, creating a perfect storm combining inflation, supply chain disruption, labor market shocks from immigration policies, and international retaliation. The situation is further complicated by widespread interruptions in technology services that support modern retail operations.
The Retaliatory Spiral
The U.S. now finds itself locked in what Cohen describes as a “retaliatory spiral,” with China restricting rare-earth minerals, Canada responding to timber and auto tariffs, and European partners preparing countermeasures. This escalating trade conflict creates impossible planning conditions for retailers who cannot reliably forecast inventory costs or consumer pricing.
Despite these challenges, technical analysis suggests some sectors may be positioned for recovery, though the broader retail landscape remains uncertain. Cohen believes business leaders should be actively engaging with the White House to lobby against continued tariff escalation, warning that “the notion of this going on for the next three and a half years brokers the possibility of a deep recession here.”
The Path Forward
With 70% of Americans already living paycheck to paycheck, Cohen predicts consumers will “get slammed” by the cumulative effect of these policies. What troubles him most is the continued silence from the business community, which he suspects may be relying on private lobbying efforts that he considers a “dead end.”
As the holiday season approaches, the retail industry stands at a critical juncture. The temporary solutions that protected profit margins through spring and summer have expired, and the full weight of tariff burdens now rests squarely on shelves filled with holiday merchandise. Whether corporate leaders will find their voice before the economic consequences become irreversible remains the unanswered question hanging over every retail executive and consumer alike.
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