【思略特】2025全球贸易重构美国关税政策对英国零售行业的影响及应对策略报告

industry

Globaltraderedefined:Retail

Dealingwithtariffuncertainty

April2025

Thisreporthasbeendevelopedincollaborationwiththe

Strategy&teamPwC’sglobalstrategyhouse.Together,we

transformorganisationsbydevelopingactionablestrategiesthatdeliverresults.

Lastupdated:9amon17April2025

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/structure

forfurtherdetails.

Introduction

Somecommonindustryactions:

1.Assessfirst-orderimpact

versussecond-orderimpact

2.Understandvariationbysectorwithinanindustry

andinterdependenciesacrossindustries

3.Adoptamixof‘noregretmoves’intheshorttermandstrategicchoicesinthelongerterm

4.Identifybothriskmitigantsandgrowthopportunities

5.Embedongoingresiliencetorespondtogeoeconomicshocks

TheUKretailsectorwillbelessdirectlyimpactedbytheintroductionofUStariffs,reciprocaltariffsandongoingbilateralnegotiationsthanothersectorsintheUKeconomysuchasautomotivesandpharmaceuticals.Buttherewillbesomefirst-orderimpactonretailerssubjecttotheir

supplychainfootprintandUSsalesexposure–andmorematerial

second-orderconsequencesoffragileconsumersentiment,lowerglobaleconomicgrowthandinflationarypressures.

ThiscreatesadditionalchallengesforUKretailersatatimewhenretailmarginsarebeingsqueezedbyincreasingcompetitionandcost

headwinds.LabourcostsalonearerisingduetoNLW,NICandThe

EmploymentRightsBill.Retailerscanmakesome‘noregretmoves’

intheshorttermandsomestructuralchangesinthemediumterm–

leveragingtheirmusclememoryfromCovidandUkrainecrisestoembedongoingresilienceintheirbusinessmodels.

Notes:1.Estimatedtariffimpactassumesmeasuresstayinplaceforaprolongedperiod,inlinewithStrategy&’s‘Breakandreorder’scenario;2.Featuredsectorsaccountforc.60%ofUKGVA(GrossValueAdded);3.Estimated2024GVAbasedonONSdata

Globaltraderedefined:RetailApril2025

Strategy&3

Globaltraderedefined:RetailApril2025

Strategy&4

Wherewearetoday

On2April2025,theUSadministrationannouncedasweepingpackageoftariffsonimportedgoods.Itmarkedthecountry’smostsignificantdeparturefromliberaltradepolicysincetheSmoot-HawleyActof1930.ThescaleofthemeasuressuggestsastructuralpivotinUStradestrategy.Giventheirbreadth,andthegrowinglikelihoodofretaliatoryresponsesfromkeytradingpartners,businessesnowfaceamateriallymorevolatileanduncertainglobaltradingenvironment.

Whathappenedon‘LiberationDay’?

TheExecutiveOrderintroducedadualframeworkof

restrictions:broad-based‘baseline’tariffsalongsidemoretargeted‘reciprocal’measures.TheEUwassubjectto

‘reciprocal’tariffsof20%,China34%,withcertain

South-EastAsianeconomiesfacinghigherratesstill.TheUKwasincludedunderthe10%‘baseline’category.

Certainexemptionsweremadeforpharmaceuticals,criticalmineralsandsemiconductors.

Priortothis,therewerealsoanumberofproduct-level

distinctions,forexamplesteelandaluminiumand

automobileswerepreviouslysingledoutwitha25%tariff.On9April,reciprocaltariffswerepausedfor90daysformosttradingpartners.The10%‘baseline’tariffintroducedon5Aprilnowappliesforallcountries,exceptChina,forwhicha145%tariffappliestomostgoods.

Afurtherrevisionwasintroducedexcludingsmartphones,computersandotherelectronics.USofficialshave

indicatedthatfurthersector-specificmeasuresarelikely.Theinternationalresponsehasbeenmixed:

•RetaliatorytariffsfromcountriessuchasChinaandCanada,whichhaveimposedtariffsonawiderangeofUSgoods.

•DiplomaticengagementfromtheUKandEU,

signallingeffortstosecureexemptionsornegotiatenewterms.

•Unilateralliberalisationfromasmallnumberof

economies,whichhaveoptedtoremovetariffsonUSimportsentirely,albeitfromastartingpointwheremostUSgoodswerenotsubjecttotariffs.

Lookingahead

RecentUSstatementssuggestfurtherrestrictionsmaybeintroducedinselectproductcategories.Economictheoryholdsthatwhentradeflowsaredisrupted,capitalflows

arerarelyfarbehind.

Assetmarketsarealreadyreacting.We’veseenvolatilityacrossequities,fixedincomeandforeignexchange–

someofwhichmayreflectrepositioningbynon-UScentralbanks,manyofwhomholdlargeexposurestoUS

governmentdebt.Thisaddsanotherlayerofcomplexityforfirmsalreadycontendingwithuncertaintyaround

Tradeisthehingebetweeneconomictheoryandpoliticalreality.Whenitswings,thewholehousecanshake.”

BarretKupelian,Strategy&andPwCUKChiefEconomist

tariffs,supplychainsandpricing.

Globaltraderedefined:RetailApril2025

Strategy&5

Whatcouldhappennext

Threescenariostoplanfortheshortterm

Inthenearterm,scenarioplanningwillbeessential.

Overtime,areassessmentofsupplychainconfiguration,investmentstrategyandriskmanagementframeworksmayproveunavoidableinthefaceofanincreasingly

fragmentedglobaltradingsystem.

Tohelpclientsbetterunderstandhowtariffscouldevolve,we’vedevisedthreescenarios.Giventheunpredictableandfastchangeshappening,we’vechosentolimitthesetotariffpolicy.However,wearemindfulthatthecurrentchangestoUStariffpolicyislikelytospilloverinto

second-andthird-orderimpacts.

Stabiliseandrebuild

Breakandreorder

TradenegotiationswithmostoftheUS’stradecounterparts,

includingtheEU,UK,Canada,Mexicoandotheradvanced

economiesbreakdown.TheUSdoublesdownonitsnecessitytoswiftlyeradicatethegoodstradedeficitwiththerestoftheworld.TheUSreimposes‘reciprocal’tariffsby8July2025.Withthisinmind,theEU,Japan,Chinaandothereconomiesretaliateinequalmeasure.Asthese

economiesimportlessthantheyexporttotheUS,retaliatory

actionsspilloverintotheservicessector(e.g.digitalservices)andpotentiallytopublicprocurement.

Intheshorttomediumrun,theex-USG20economiessetup

trade,regulatoryandinvestmentcooperationmechanismsatveryrapidpace.Inthisscenario,wecouldalsoseesome

non-Europeaneconomies

seekingaCustomsUnion

arrangementwiththeEuropeanUnion.WecouldalsoseesomeSouth-EastAsianeconomies

forgingclosertradingrelationswithChina.Thesechangesarealsorapidlyreflectedin

investmentflows.

Divideanddeal

ReversalofUSpositionontariffscoupledwithtime-boundtrade

negotiationswithsomeofthe

US’stradingpartners(EU,UK,

CanadaandMexicoincluded)butexcludingChina(andpotentiallysomeotherSouth-EastAsian

economies).

Canada,MexicoandChina.

Tolimitmarketuncertainty,thereisregularforwardguidanceon

thestateofthetrade

negotiations.TheUS’smain

tradingpartnersstrikelimited

tradearrangementsbytheendofthe90dayssuspensionperiod(i.e.8July2025).Thesecome

intoforcebytheendofthecalendaryear.Intheinterim,the‘baseline’tariffscontinuetoapplyformosteconomies,includingChina.

ReversaloftheUS’spositionontariffs,coupledwithtime-boundtradenegotiationswithitsmaintradingpartners,including

●Forthosecounterpartswhereatradearrangementisagreedby8July2025,theseareputinplacebytheendof

2025/Q12026.Intheinterim,the‘baseline’tariffsremaininplace.

●Forthosecounterpartswhereatradearrangementisnot

agreeduponwithinthe90days,reciprocaltariffsarere-imposed,consistentwiththe2April2025

announcement.

●ForChina,tariffsremainin

placeconsistentwiththeUS’slatestannouncementsand

Chinesepolicymakersreactinkind.

Inthemediumtolongrun,theex-USG7economiessetup

cooperationmechanismswhichleadtograduallyclosertrading,regulatoryandinvestment

cooperation.

Takingstockoftariffs

Understandingtheimpactontheretailsector

Aperspectiveonretailoverall

RetailersfacehighercostsofsellingtotheUSandpotentialdumpingoutsideoftheUS–butthebiggerworryisthewiderimpactonconsumersentimentthatdrivesvolatilityinspendingpatternsandthereforeinretailmarketoutlookanddealsflow.

01

HighercostsofservicingtheUSmarket

SalestotheUSattracta‘baseline’tariff(10%)–withahigherburdenonsourcingfromhigh-tariffjurisdictionsasthecountryoforigin(30%+withoutbenefitofdeminimisthresholdforChinaandHongKong),unlessgoodsaresubstantiallychangedorusedinthemanufactureofnewproductsintheUK.

02

Inflationarypressuresforbothcostsanddemand

Newglobaltradedynamicsaffectinputcostsacrosstheretailvaluechain–withpotentiallyhighercostsofTier2/3sourcing,shippingandwiderinfrastructure(e.g.warehouses).Thesecostsarelikelytobepassedonto

consumers(infullorinpart)withlittleretailmargincushiontoplaywith.

03

IncreasedcompetitionoutsideoftheUS

High-tariffcountriesmayredirectexcesssupplyfromtheUStotheUK,EUandotherregionswhichwillintensifycompetitioninaretailmarketservedbyarangeofbusinessmodels(direct,wholesale,marketplaces,resale

andrental).

04

Declineinconsumersentimentandmarketgrowth

OurUKconsumersentimentindexfellto-12inMarch2025(thelowestlevelsinceSeptember2023).More

peopleexpressedconcernsabouttheeconomy,inflationandgeopoliticalevents–evenbeforeUStariffswereannounced.Asaresult,moreconsumersareintendingtocutbackonspendingbyadoptingamixofcopingmechanisms(makingfewerpurchases,buyingcheaperproductsand/orshoppingatcheaperretailers).

05

Depresseddealsmarket

Thevolumeandvalueofretailtransactionswereadverselyaffectedbythecost-of-livingcrisis(retaildeals

volumedown-23%acrossEMEAinH22024).Investorswillhavemixedappetitefordiscretionarycategories–creatingavaluationsgapbetweenbuyersandsellers.

PwCConsumerSentimentIndex,2008-25

“Thinkingaboutyourdisposableincomeinthenext12months,doyouthinkyourhousehold

willbe…?

Globaltraderedefined:RetailStrategy&

Source:PwCConsumerSentimentSurvey(March2025)

Globaltraderedefined:RetailApril2025

Strategy&7

Takingstockoftariffs

Understandingtheimpactbyretailcategory

Aperspectiveonretailcategories

Someretailcategoriesaremoreexposedthanothers,reflectingtheirsupplychainfootprintandwiderresilienceofthatspendforconsumers.

Apparelhasaconcentrationofsuppliers

fromcountriesthathavebeenhardesthitbytariffs(e.g.China,Cambodia,Bangladesh)

–withsomeUKretailershavingamaterialbusinessintheUS.Apparelwasthe

worstimpactedcategoryduringthecost-of-livingcrisis.

Electricalsandhomesourcefromamixofhigh-andlow-tariffjurisdictions(e.g.

China,Germany,Japan,SouthKorea).Bigticketpurchasesaremorelikelytobe

delayedwithadeclineinconsumersentiment.

Healthandbeautyisarelativelyprotectedcategorywithamanufacturingfootprint

acrossEurope(predominantlyinFrance,

GermanyandItaly),theUSandChina.

Consumersareprioritisingwellnesscomingoutofthepandemic.

Foodisthemostprotectedcategorywithc.10%exportstotheUS(versus55%forEU).UKconsumersconsistentlyprioritisefoodspend(moreabouttheirinflation

expectationsthanabiggershareofstomach).

Globaltraderedefined:RetailApril2025

Strategy&8

Takingstockoftariffs

Assesstheimpactsandshorttermactions

Taxandoperationalassessment

Whilethemediumtolong-termstructuralimpactontheretailsectormayultimatelybesignificant,suchshiftsarelikelytounfoldgradually.Anyoperationalresponsesorstrategicinterventionswillneedtobecarefullyphasedovertime.Inthenearterm,however,theimmediatepriorityforretailoperatorsistothoroughlyassessandquantifythetariff

implicationsfromataxandoperationalperspective.Thefollowingactionscanbetakennowandmayhaveameaningfulimpactonyourbusiness’soverallexposure.

Conduct/validateimpactassessments,

01includingunderstandingthephysicalproduct/

materialflows.

Revieweligibilityfortariffexemptionsand

02exclusions,forexamplegoodsintransit

before12.01amEDTon5April2025.

Understandthecountry-of-originrules

03andplacewheregoodsaresubstantially

manufactured.

04

Understandthevaluebuildupofthepricetoensurethecustomvalueiscorrectandreviewcostcomponents.

05

Considerfromatransferpricingperspectivethatintercompanyproductpricingiscorrectandthatanyrevisedpricing(ofproductorwiderservices)adherestothearm’slengthprinciple(andalignswithcustoms

considerations).

06ConsidertheUSspecificvaluationprinciples.

Reviewcontractstoconfirmwhetherthey

07includeatariffcostadjuster/escalatorin

termsofcost

Considertheimpactonanychangestothe

08aboveontheincometaxpositionintheUS

andotherjurisdictions.

NavigatingthepotentialfalloutShortandlongertermactionsyoushouldtake

Retailersneedtoprepareforanewworldorderwhichischaracterisedbyregionalpowerblocs,statecapitalismandbilateralrelations.Thistransitionwillcreate

geopoliticalvolatilityintheshorttermandglobaltraderealignmentinthemediumterm.

Retailerscanmakesome‘noregretmoves’nowto

mitigateinitialriskstomarginandmorestructural

changestotransformthebusinessmodel–that

collectivelyembedresiliencetocounteranygeopoliticalshocks(tariffsorotherwise).

Short-term‘noregret’moves

Movestocapturemaximumvalueoverthelongerterm

Themes

AbsorbinitialshockfromUStariffsandnavigategeoeconomicvolatility

Makestructuralchangestofuture-proofbusinessagainstglobaltraderealignment

Taxation

●Considerthetaxpointsnotedonthe

previouspage,andevaluatetheimpactonincometax,transferpricingand

tariffs(takingaholistictaxview)

●Considertheoveralltaxmodel(customs,transferpricing,directandindirecttaxes)implicationsandimpactofanysupplychainreorganisationsoastofullyevaluatethe

optionsthroughanintegratedbusinessandtaxperspective

●

●

Sourcingand

supplychain

●

●

Re-negotiatecontractswithsuppliersandlogisticspartners–andoptimise‘buffer’inventories

Switchtoalternativedistributionroutes

Rebalanceanddiversifysupplierbaseinlow-tariffterritories

ExplorewarehouseanddistributioncapabilitiesintheUS

Pricingandrange

●

●

Explorepriceincreasesforselectcategories/SKUs

Shiftstocktomoreprofitablechannelsandterritories

●

●

Optimisecategorymixandpricearchitecturewithlowercosttoserve

Rebalanceinternationalsaleschannelsinlow-tariffterritories

Financialandliquidity

●

●

Manageanyworkingcapitalrisk

associatedwithsupplychaindisruptionPre-emptrefinancingandcredit

requirements

●

●

Revisitcapexprioritiesacrossvaluechainandgeographies

Resetmarginandcashthresholdsundernewglobaltradingregime

Sourcesofdefensibleandscalabledifferentiation

Businessmodeltransformation,poweredbytech

RapidtaximpactassessmentScenarioplanning

Riskmitigation

Overall

●

●

●

●

●

Retailersneedtorebalancetheirmixofsalesandsourcingtomitigaterisksassociatedwithinternationaltariffsandsupplychaindisruption