Tariffs Return, Threaten Retail Margins and Prices

New tariffs are rocking retailers—stocks are sliding, supply chains are shifting, and price hikes are now all but certain.

Jordan B.
April 07, 2025

Together with

Good morning. A sweeping new round of tariffs is shaking up the retail sector—threatening consumer prices, squeezing profit margins, and complicating supply chains just as the industry found its footing.

Today's issue is sponsored by Vintage Capital: invest in recession-resilient Mobile Home Parks.

🎙️ In this week’s episode of No Cap Podcast, Jack Stone and Alex Gornik sit down with Spencer Burton, co-founder of Adventures in CRE and CRE Agents, who transformed the real estate industry by creating essential financial modeling tools used by thousands and pioneering AI-powered digital coworkers.

Market Snapshot

S&P 500

GSPC

5,074.08

Pct Chg:
-5.84%

FTSE NAREIT

FNER

725.29

Pct Chg:
-4.11%

10Y Treasury

TNX

3.977%

Pct Chg:
-0.01

SOFR

30-DAY AVERAGE

4.342%

Pct Chg:
-0.00

*Data as of 04/04/2024 market close.

ON THIN ICE

Retail Hit by New Tariffs as Supply Chains Scramble

Source: CoStar

New tariffs are rocking retailers—stocks are sliding, supply chains are shifting, and price hikes are now all but certain.

Retail stocks dive: President Trump’s surprise tariff hike on China, Canada, and now Vietnam rattled markets, sending the Dow down nearly 1,700 points. Major retailers, including RH (Restoration Hardware), Gap, VF Corp., and Wayfair, saw their stocks tumble, with RH down 40%—the worst performer of the day.

Zoom in: Despite the tariff shockwaves, retail real estate fundamentals remain sturdy. Vacancy is at a near-record low of 4.2% across 12.2B SF of space, though warehouse tenants are growing cautious amid rising import costs.

Growing problem: Many big chains had started shifting supply chains. Target dropped its China sourcing from 60% in 2017 to 30% now, aiming for 25% by next year. Macy’s built up inventory ahead of the tariffs. Still, CoStar’s Brandon Svec says earnings will take a hit—retailers face “a choice between lower margins or lower sales.”

shoppers paying the price: Retailers say price hikes are “highly likely.” Best Buy CEO Corie Barry noted China and Mexico are their top supply sources, and vendors will pass costs along. RH and Walmart echoed the concern, though Walmart says it’s better positioned, sourcing two-thirds of products domestically.

Zoom out: The National Retail Federation expects U.S. retail sales growth to slow to 2.7–3.7% in 2025 ($5.42T–$5.48T range). They warn small retailers will be hit hardest, as tariffs raise costs for importers—not foreign suppliers.

➥ THE TAKEAWAY

Why it matters: Retailers are bracing for thinner margins and higher consumer prices. While real estate demand remains stable for now, prolonged tariffs could cool leasing activity and stress tenant operations across retail and logistics sectors.

TOGETHER WITH VINTAGE CAPITAL

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*This is a paid advertisement. Please see the full disclosure at the bottom of the newsletter.

✍️ Editor’s Picks

Bond shelter: Investors are rushing into Treasuries as Trump’s tariffs stoke recession fears—even as inflation risks cloud the Fed’s path.
Smart diversification: Looking to expand your portfolio? Review the top crowdfunding platforms, including features, minimums, and property types offered. (sponsored)
Global design: Stantec is acquiring Page in a deal that will make it the second-largest U.S. architecture firm, expanding its reach by 35% and solidifying its national and global footprint.
Tack bracket: NYC’s priciest property tax bills are led by Qatari royalty and hedge funder Ken Griffin, with homeowners paying far less—yet still at the center of an ongoing lawsuit over systemic inequities.

🏘️ MULTIFAMILY

Midwest move: Morgan Properties' $501M acquisition of 11 multifamily assets adds 3,000+ units and signals a bullish bet on the region’s affordability, demand, and long-term growth.
Filling the gaps: Amid federal pullbacks, SDS Capital is stepping in with a $1B private debt platform to finance affordable and moderate-income housing, offering below-market rates to get stalled projects moving.
Legal pushback: RealPage is suing Berkeley over its ban on algorithmic rent pricing, arguing the law violates free speech and deepens the company’s mounting legal troubles.
Funding freeze: With HUD's GRRP paused and staffing cuts looming, multifamily developers face growing uncertainty around financing and future project feasibility.
New heights: L.A. is moving to allow single-stair multifamily buildings up to six stories, aiming to cut construction costs and enable larger, more affordable units—though some safety concerns remain.

🏭 Industrial

Ownership play: Burlington bought its longtime Inland Empire distribution center from BlackRock for $257M, joining a growing wave of occupiers turning owner as industrial demand rebounds.
This land is our land: The DOE has identified 16 federal sites for potential data center development, aiming to fast-track AI infrastructure with support for nuclear and clean energy under Trump’s executive push.

🏬 RETAIL

Food Hall burn: Jean-Georges’ $200M Tin Building in NYC is scaling back after a $33M loss, as foot traffic lags and operators cut costs to stem the cash bleed.
Retail rodeo: Hollywood producer Bob Yari sold his fully leased 220K SF Greenville retail center to Dunhill Partners, cashing in on surging demand along Texas' booming I-30 corridor.

🏢 OFFICE

Top tier: Rents for D.C.’s trophy office space hit record highs as demand outpaces dwindling supply, with few new developments in the pipeline and tenants scrambling for premium space.
Mixed signals: DFW’s office market kicked off 2025 with over 1.1M SF in new leases and rising Class-A rents, but slowing office-job growth clouds long-term momentum.