Tariffs strain consumer goods companies
Shifting trade policies raise the stakes to enhance business resilience
Half a year into Donald Trump’s tougher tariff regime, the consumer goods industry is still adjusting to the new trade reality.1 Companies of all kinds—from clothing to electronics to furniture businesses—are struggling to juggle significant cost increases and operational challenges.2 To their chagrin, a comprehensive tariff agreement between the Trump administration and China—the top source of consumer goods into the United States—remain up in the air. To learn how various industries, including consumer goods, are coping in the volatile trade landscape, KPMG conducted a second survey of senior executives.3
Financial and operational impacts
Tariffs have saddled many consumer goods companies with higher costs and lower margins. For Chinese imports, 36 percent of surveyed executives reported a cost hike between 26 percent and 40 percent while for Mexican goods, 43 percent experienced an increase between 16 percent and 25 percent. As a result, 67 percent said gross margins decreased—the highest among all sectors surveyed and a big jump from the 43 percent of respondents who said so in our first survey. Meanwhile, due to the tariff uncertainty, half of respondents reported job reductions, and 40 percent said they paused hiring. Low visibility is a big problem, with 60 percent of respondents saying they feel doubtful or insecure about tariff stability. A majority (57 percent) expressed negative sentiment about the current US trade and tariff environment.
Sentiment with respect to tariff stability
Risk preparedness strategies
Given the persistent tariff uncertainty, consumer goods companies are redoubling their risk management efforts. To better monitor and respond to tariff developments, 57 percent of executives surveyed are using scenario planning and impact modeling. Equal numbers are deploying advanced analytics (40 percent) and generative artificial intelligence (40 percent) to simulate trade policy changes and analyze potential impacts with greater precision. For compliance with the changing tariff process, 30 percent are turning to external advisers and consultants. Yet less than one-quarter (23 percent) felt their tariff-facing strategy was ineffective.
Mitigation strategies in practice
Consumer goods companies are doing their best to mitigate the worst effects of tariffs on their business with a mix of counter moves. For starters, one-fifth have postponed or scaled back investments, while 37 percent have revised their evaluation criteria to factor in tariff uncertainty. They are also looking to bring operations back home, but this remains a complex challenge. While only 17 percent said that are in early or informal discussions about reshoring, 33 percent are not yet considering it. High labor costs are a major hurdle for 73 percent of respondents, with Only 17 percent say that pivot would take longer than 2 years, while 53 percent would take up to 12 months.
In the meantime, half the surveyed executives are aiming to reconfigure supply chains to ease tariff pressures. Among respondents, 60 percent have renegotiated supplier contracts, 40 percent have sought new supplier contracts, and 37 percent have shortened contract durations and added tariff clauses for flexibility. Pricing modification is also a common tactic of many consumer goods companies: 57 percent have adjusted prices to account for tariffs, with 40 percent planning increases between 6 percent and 15 percent, and 37 percent planning hikes up to 5 percent. They are handing off a significant portion of tariff costs to customers, with 43 percent passing on 51 percent to 100 percent and 47 percent passing on 1 percent to 50 percent. But half noted that customer pushback on price was a top challenge to successful tariff management.
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Consumer goods companies are responding to tariffs with more thoughtful risk management tactics and mitigation steps supported by advanced technology and analytics. As trade policies continue to shift, it is essential for companies to engage in continuous scenario planning, enhance supply-chain adaptability, and embrace nimble pricing to maintain business resilience.
To better monitor and respond to tariff developments, 57 percent of executives surveyed are using scenario planning and impact modeling.
Footnotes
1 “Fact Sheet: President Donald J. Trump Ensures National Security and Economic Resilience Through Section 232 Actions on Processed Critical Minerals and Derivative Products,” The White House, April 15, 2025.
2 “Fact Sheet: President Donald J. Trump Addresses the Threat to National Security from Imports of Timber, Lumber, and Their Derivative Products,” The White House, September 29, 2025.
3 The first survey was in May 2025. In September 2025, KPMG again surveyed 300 US-based senior executives in various functions about their views on the US proposed tariffs and their effect on their company and industry. Of the total respondents in each survey, 30 represented the consumer industry.
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