Most retail executives expect Trump to walk back ‘reciprocal’ tariffs, survey finds

Even retail executives are bullish on the “TACO trade.” 

Following weeks of shifting trade policy, early deals and winding court challenges, some retail executives are starting to feel more optimistic about President Donald Trump’s so-called reciprocal tariffs, a new survey from consulting firm AlixPartners shows. 

The survey, which polled executives from brands, retailers and other consumer companies on June 1, found most respondents expect the president will walk back those steep duties on the European Union, Vietnam, India and Mexico after a 90-day pause lapses in July. Mexico wasn’t part of Trump’s reciprocal tariffs but has faced new levies from the administration, which respondents also expect will stay the same.

Imports from those areas and dozens of other countries are facing a 10% duty as the Trump administration tries to hammer out trade deals with individual nations. Most survey respondents expect those 10% tariffs to remain in effect — rather than the far higher rates originally imposed on April 2 — after those negotiations are complete. 

For example, 53% of retail executives expect tariffs on goods imported from Vietnam to stay at 10% after the delay ends, instead of the feared 46% “reciprocal” levy that could batter companies like Nike that import a major share of goods from the country.

For many retailers, Vietnam has become the next manufacturing frontier outside of China. Negotiations between the southeast Asian country and Washington D.C. have been closely watched, and the subject of many executives’ consternation in recent months. 

In the weeks after Trump announced then reduced the steep “reciprocal” tariffs, many executives feared they would end up being higher than 10%, said Sonia Lapinsky, a partner and managing director at AlixPartners, citing conversations the firm has had with retail leaders. 

But as June approached, the vibe started to shift, the survey results show. 

For one, the U.S. and China finally came to the negotiating table. Days before the survey was conducted, the U.S. Court of International Trade also ruled that Trump didn’t have the authority to impose the April 2 tariffs. While that ruling is on hold pending appeal from the Trump administration, the developments signaled to retailers that the tariffs could be scrapped altogether, the survey results show. 

“[Trump] is showing that he wants to make a deal, and that took a lot of effort for him to go and get that done at that stage. If we remember, even trying to get a meeting was very difficult for both sides to get done and yet they got progress made,” said Lapinsky. “I think the fact that there was some pushback that has since been retracted on allowing the tariffs to go through, I think could make some people feel more confident that potentially that could happen again.” 

In the days after the survey was conducted, Trump made a preliminary deal with China to maintain a new 30% tariff on imports, after he reduced a previous 145% duty.

It’s another sign to retail executives that tariffs on the rest of the world could remain at 10%, and shows their views may align with the so-called TACO trade – a critique coined by a Financial Times columnist that stands for “Trump Always Chickens Out.” 

The term describes a past pattern where Trump announces high tariffs and then later pauses or lightens them after markets react negatively. 

When asked about the term last month, Trump said it’s not about chickening out. 

“It’s called negotiation,” he said.

Still, Lapinsky cautioned that the optimism among retailers could be premature. 

“We can see that China could be at status quo, because there’s been such discussion about the deal making back and forth and the priorities of both countries to get something to work eventually, but these other countries don’t have the leverage that China has,” said Lapinsky.

“Whether they’re going to be able to negotiate keeping down a similar deal or not to me remains very unknown,” she continued. “I wouldn’t have expected that many retailers to say they thought it was going to stay status quo.” 

While more respondents expect the 10% tariff to remain in place in most regions outside of China, the responsible companies are planning for both, said Lapinsky. 

For example, 46% of respondents expect tariffs on imports from India to stay at 10%, instead of the proposed 26% levy. But 29% of respondents are also planning for both scenarios, where duties either stay the same or end up higher.