Many dark or soon-to-darken storefronts are household names, such as Payless ShoeSource, Gap, J.C. Penney, Family Dollar. They have struggled to compete as customers spend more of their money online (and elsewhere, such as restaurants).
Malls were also vastly overbuilt, growing more than twice as fast as the U.S. population from 1970 to 2015. So even without Amazon and other e-commerce, a correction was probably coming eventually, if not necessarily the retail-pocalypse we see today.
There are lots of parallels with Trump’s pet industries. Retail, for instance, is dominated by demographics at the heart of Trump’s political base: financially insecure non-college-educated whites displaced by technological change.
Yet, for some reason, the decline of retail — and the 160,000 industry jobs eliminated since January 2017 — hasn’t inspired nearly the same level of sympathy as have similar challenges in other industries.
Perhaps that’s because retail isn’t as geographically concentrated as manufacturing. Bombed-out malls dot the country, punching holes in employment numbers. But there’s no Rust Belt-like locus for candidates to pander to.
Whatever the cause, that lack of sympathy is going to be a problem. Because just as these companies are enduring painful structural change, Trump is threatening to jack up their costs.
When Trump began his tariff hikes in early 2018, he mostly spared consumer goods, with some notable exceptions. His tariffs on steel, aluminum and $250 billion of Chinese imports primarily targeted inputs. Then last month, he announced plans to levy new duties of 25 percent on the remaining $300 billion or so of Chinese products. What’s left is largely consumer goods: cellphones, clothing, toys, shoes and so on.
Retail companies are freaking out. They source much of their inventory from China and can’t reroute their supply chains easily, cheaply or quickly.
This echoes what big retailers had already been warning investors and customers: Sweeping tariffs will stress already-thin profit margins and lead to layoffs. They will also raise prices for U.S. households by hundreds or thousands of dollars, wiping out the value of Trump’s tax cuts.
Trump’s trade wars have caused plenty of pain for U.S. companies already, but he’s cushioned the blow to some through taxpayer-funded bailouts. No such rescue seems in the offing for retail.
Even if Trump were inclined to execute such a bailout, designing it would present a challenge. How, after all, would you bail out nearly every taxpayer in the country?