What: Severe tariff anxiety is fueling a short-term surge in US retail sales, as consumers rush to buy before anticipated price hikes.

Why it is important: Severe tariff-driven consumer behavior is temporarily boosting sales, but this trend is unsustainable and signals deeper volatility ahead.

The recent surge in US retail sales is less a sign of economic strength and more a reflection of consumer anxiety over impending tariff increases. As tariffs loom, shoppers are engaging in panic buying, driving up transaction sizes and accelerating purchases across the retail spectrum. Lower-end retailers such as Walmart and Dollar General are outperforming, benefiting from both increased market share and a shift of more affluent consumers trading down in anticipation of higher prices. Off-price giants like TJX, Ross, and Burlington are also thriving, as consumers perceive them as more resilient to tariff impacts, even if this perception does not fully align with reality. Meanwhile, struggling retailers like Macy’s and Kohl’s are experiencing temporary improvements, largely due to short-term consumer behavior and strategic adjustments, but these gains are likely to be fleeting. Industry experts warn that this period of elevated sales is the calm before the storm, with the true impact of tariffs expected to hit in the coming months, leading to more isolated winners and a longer list of losers as the sector faces heightened volatility and structural challenges.

IADS Notes: Recent analysis from April and July 2025 confirms that tariffs are fundamentally reshaping consumer behaviour, with panic buying and trading down driving unexpected sales growth. Major retailers like Walmart are leveraging their market power to maintain margins and attract new customer segments, while off-price and value channels benefit from shifting demand. However, March 2025 and May 2025 reports from Forbes and The Economist caution that these gains are temporary, as department stores like Macy’s face persistent structural headwinds and the broader sector braces for volatility once the full effects of tariffs materialise.

How to explain the recent surge in retail sales?