Tariffs, caution, and consumer resilience: Inside Wells Fargo’s 2025 Supply Chain Report

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The early months of 2025 have been marked by tariff uncertainty, shifting import strategies, and a cautious retail sector, but the supply chain is showing signs of both resilience and restraint. Wells Fargo’s newly released report, From factory to checkout: The supply chain story you didn’t know you were living, paints a picture of a supply chain landscape that is both cautious, but also not staying still.

Consumers still resilient

Despite persistent tariff anxieties, Wells Fargo executives say the U.S. consumer remains stronger than headlines might suggest.

“Retail sales for July were up 0.5%-ish across the board,” Jeremy Jansen, head of global originations for Wells Fargo Supply Chain Finance, noted in a media briefing on Aug.  afternoon. “Again, speaking of the [American] consumer, there is certainly some inflation in that number. I think core goods inflation was up 1.5% in July, so that tells me that the consumer continues to remain reasonably resilient year over year.”

Jansen emphasized that the burden of tariffs isn’t falling on one group alone.

“My view is that the impact of the tariffs is typically being shared three ways, right? The supplier, the buyer or importer, and then some of that being passed on to the consumer. But I remain really confident in the consumer and their ability to keep pushing through this.”

Retailers walking a fine line

Retailers, however, are taking a cautious approach to inventory and pricing. Some moved aggressively to front-load shipments early in the year, while others paused purchases until tariff clarity emerged.

Adam Davis, managing director for Wells Fargo Retail Finance, explained the balancing act businesses have been navigating.

“You had others that just kind of hit the pause button until there was just more visibility and more stability in what the tariff impact was going to be. With that, they took a lot of short-term tactics, whether that’s as I mentioned, frontloading or pausing, maybe lowering inventory buys just to be able to fill the shelves and the warehouse and then lean in once they had more of visibility,” he said.

For many, that visibility came by late spring, leading to a modest inventory uptick in May and June. Yet retailers are being surgical in their pricing strategies, the experts said.

“[What] we’ve seen with the retailers is that they are taking a very methodical approach, looking at it from a blended gross margin, not necessarily on a SKU-by-SKU basis,” Davis said. “We’re willing to make more money on this item, less money on this item to kind of get to a blended basis.”

He added that retailers are also mindful of consumer sentiment heading into the holidays.

“Some of the retailers [are saying], you know what, we can’t increase the pricing as much to get back the loss we have on the higher cost of goods, but what we can do is we can start cutting some of our operating costs, some of our investments, and so they’re trying to take a bottom-line view, a bottom-line approach versus maybe just the margin line.”

Transportation’s viewpoint: Complexity and caution

The tariff environment is also reshaping transportation strategies, explained John Crum, head of specialty equipment finance and leasing at Wells Fargo. Crum highlighted how shifts in port activity from one coast to the other are complicating planning.

“Planning is really difficult once we have some of the starts and stops,” Crum explained. “Our clients are expressing real caution in terms of what they’re doing, what their business planning is. And for many of them, the reaction is to wait and see as things kind of finalize and work their way through the system.”

He noted that lessons from COVID are resurfacing.

“Customers are definitely employing those strategies right now. The takeaway from us from the transportation side is just the overall complexity of the global supply chain. I think what we showed throughout this is how an impact in one part works all the way through the businesses who handle the goods and all the way into the consumers.”

One silver lining, though, is that excess capacity in freight markets is holding rates down which helps retailers offset costs even as volumes soften.

“Freight rates are really low and some of the uncertainty and the capacity that’s in the market right now are keeping those rates low. So to the extent that the cost of freight is a component of a retail sale, there’s a slight benefit to that,” Crum said.

Sector hotspots: Furniture, apparel, and autos

Not all sectors are experiencing tariffs equally. Home goods and furniture are facing what Davis described as “a little bit of a double whammy” due to both tariffs and existing headwinds. Jansen added that “furniture inflation was up almost 6% in July where generally inflation was up one or two points, so certainly you’re seeing some pressure there.”

Apparel and footwear, heavily dependent on Chinese sourcing, remain exposed, while auto parts and vehicles are navigating a more mixed landscape thanks to USMCA tariff exemptions and front-loaded stocking.

Holiday outlook: Early and targeted

With holiday sales expected to grow modestly (the National Retail Federation is projecting 2–3%), retailers are bracing for an elongated shopping season and leaner promotions.

Jansen explained that customers looking for rebates on appliances or furniture may find those scaled back as retailers look for ways to mitigate tariff impacts.

“Those rebates… are probably a good place to look for elimination if your margins are getting squeezed versus increasing your sale price,” he said.

Davis stressed that promotions won’t disappear entirely but will be more selective.

“There is no way the retailers are going to move completely away from being promotional,” Davis said. “It’s just the fall has become such a promotional environment.”

Davis added that he is watching whether retailers have aggressively promoted in the past continue to do so. That may shine a light on whether the consumer is actually paying more for goods.

Looking ahead

The Wells Fargo team agrees that the effects of tariffs will continue into 2026 and beyond.

“It's going to take some time for this to season and kind of flow through the system. It’s not a quarter-by-quarter item where you’re immediately going to see the impact,” Davis concluded. “This will bleed into next year and everybody’s kind of navigating it together.”

For now, consumers remain resilient, retailers are cautious, and transportation providers are adapting. As Crum summed it up, “The focus on the supply chain is front and center and I think a lot of people got introduced to supply chain during the pandemic and the situation with tariffs is reinforcing those conversations."

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