On April 2nd 2025, President Donald Trump sent shockwaves across global markets with the announcement of a sweeping set of tariffs he argued would bolster the American economy. 

Tariffs are taxes imposed on imported goods, designed to make foreign products more expensive and, in theory, encourage consumers to buy domestically produced alternatives. Imposed on numerous countries from South Korea to Switzerland, these measures raised the effective tariff rate from 2.5% in January to an estimated 27% in April 2025, the highest level in over a century.

Many of the US-based retailers we work with rely on imported goods and services from outside the US, and so we’re often asked what impact these tariffs are having on retail. Are retailers raising prices to absorb the higher import costs? Is consumer behavior (and crucially, their spending) changing in response? 

We analyzed data from a number of our North American clients across Beauty & Cosmetics, Fashion & Footwear, and a third category (Other) which contains Furniture, Entertainment, and Marketplaces, to gain answers to these questions.  We used data from April 2023 and a YoY comparison of March - May 2025 vs March - May 2024.

Keep reading to find out what impact the tariffs are having on both consumer behavior and retail performance so far.

How are tariffs impacting prices?

Looking back at data from recent years, we can see that prices for both Beauty & Cosmetics and Fashion & Footwear have been on the rise since 2023. However, March 2025 saw an increase in prices for the former above the trend, while the latter saw a decline. 

According to our data, average prices in the Beauty & Cosmetics vertical have increased moderately since the announcement of the tariffs. However, for Fashion & Footwear average prices have dropped, and for the Other category, there’s no major change.

Typically, we see average product pricing rise during peak trading (October - December) before returning to pre-holiday levels; you can see this in the graph above for the 2023/24 season. However, in 2025 the post-holiday price drop was much less pronounced. This indicates that retailers may be keeping prices elevated in response to the tariffs to offset increased costs. 

Two industries, two different reactions

Both the fashion and beauty industries are significantly exposed to tariffs as they heavily rely on imported products, raw materials and packaging components from overseas. So why the difference in pricing strategies? 

In Fashion & Footwear, we saw a sharp increase in the number of orders containing a coupon code in February 2025, the biggest and fastest rise we have seen in the last 2 years. This seems to indicate a knee-jerk reaction from fashion and footwear retailers to reassure price-sensitive customers through an increase in promotional activity. This is a common strategy to navigate rising input costs while trying to keep pricing competitive and attract customers.

The beauty industry, however, seems to have taken the opposite approach, with couponing at its lowest rate in the last 2 years. This could be because beauty tends to fare better than other industries during times of economic recession, driven by strong brand loyalty. For example, when the COVID-19 pandemic spread in the second quarter of 2020, sales of beauty and personal care products stayed flat, while cosmetics fell just 7%. 

This loyalty, combined with resilience within specific beauty categories such as personal care products, could explain why beauty retailers stuck to their guns and kept prices elevated. However, as we’ll see, the knock-on effect has been reduced basket sizes and average order value (AOV).

The long-term outlook

While some studies suggest a modest immediate impact on overall prices (and thus potentially revenue), especially due to retailers absorbing some costs, the longer-term trend is clear: prices are expected to rise, and consumer spending is likely to fall.

A survey conducted in April 2025 found that global fashion brands and retailers expect to raise prices by an average of 20% in response to the tariffs.

According to the survey, 85% of fashion brands plan to pass on some or all of the additional tariff-related costs to consumers through higher prices. Similarly, 96% of US-based retailers and 82% of retailers outside the US also intend to raise prices.

Ultimately, price rises for consumers as a result of the tariffs are highly likely, and as we’ll explore next, consumer shopping habits are already changing.

How are tariffs impacting consumer spending?

Tariffs have exacerbated the long-term trend of reduced consumer spending, but they’re not the root cause. Underlying factors such as evolving consumer preferences, increased competition, and a wider economic slowdown are likely already at play, with tariffs adding another layer of pressure.

When comparing March-May 2025 and March-May 2024, the Beauty & Cosmetics and Fashion & Footwear industries have seen their revenue fall, whilst Other has seen small positive growth. Beauty & Cosmetics fell 3.07%, Fashion & Footwear fell 5.93%, and Other grew 1.40%. 

However, this performance isn’t strictly a result of the tariffs, but rather part of a long-term trend of lower revenues in certain verticals which could be linked to changing customer spending habits and attitudes. 

Our data shows that revenue has been down for Beauty & Cosmetics and Fashion & Footwear throughout the second half of 2024, though the Other category has seen more positive and consistent growth in that time. This indicates that falling revenue is an existing trend which the tariffs may well have exacerbated among our clients, but not directly caused.

A similar pattern emerges with AOV. Though AOV has been on the decline since February 2025 in Beauty & Cosmetics and Fashion & Footwear, the last 2 years have seen this figure fluctuate significantly. This again suggests that though tariffs may have caused customers to be more hesitant to open their wallets, broader market trends are also driving reduced spending in these categories.

Most telling is the drop in average items per basket in Beauty & Cosmetics since March 2025. Combined with rising prices and lower AOV, this suggests that customers are potentially buying fewer products per order in this category to offset higher costs.

The long-term outlook

Looking beyond recent tariff impacts, the wider trend of reduced consumer spending has been building for the past few years. Global inflationary pressures, rising living costs, and economic uncertainty have consistently weighed on consumer confidence, causing revenue to fall in categories which are more aligned with discretionary spending.

As a result, we’re now seeing the rise of what McKinsey has termed the “value now” consumer. In part to cope with feeling relatively downbeat about the economy, these consumers are focused on making their spending go further, prioritizing purchases that deliver the greatest sense of value. It’s not just about finding the lowest price—they’re looking for the best return on their money, shifting between saving and spending depending on the product category. And when they’re really inspired, they’ll splurge.

To adapt, retailers need to focus on demonstrating value to customers through the delivery of truly personalized, meaningful customer experiences across every touchpoint which drive loyalty and leave them feeling understood and inspired.

At this stage, we haven’t observed a huge impact from the tariffs on overall revenue, AOV, or email performance, though we’ll continue to monitor the situation as the second half of the year unfolds.

These tariffs, however, are ultimately another flashpoint in a broader macroeconomic environment which is defined by uncertainty, and it’s causing customers to be more discerning and value-driven than ever before.  

To thrive amidst this ongoing economic uncertainty, brands must make fostering customer loyalty a priority. That means delivering consistently excellent experiences, offering meaningful value, and creating emotional connections that truly resonate with customers’ values and aspirations. 

Ometria is a Customer Data and Experience Platform (CDXP) exclusively for retailers, which means that we are uniquely positioned to understand how economic events such as the tariffs can impact retail success. If you want to speak to one of our industry experts about driving growth and brand loyalty through outstanding customer experiences, why not get in touch here.