How significant is the impact of tariffs on the U.S. retail industry? The market is hesitant to believe
Morgan Stanley's latest research report shows that under the current tariffs, retail prices will rise by an average of 3.6%, while retailers' gross margins will fall by an average of 16%, and EBIT will plummet by an average of 30%. It is expected that Target will raise prices by 6%, with gross margins dropping by 30% and EBIT crashing by 70%. This has a significant impact on American retailers, and the market lacks confidence in the status quo of tariffs
Morgan Stanley's latest research report estimates that under the current tax rate, assuming suppliers bear 50%, retailers bear 25%, and consumers bear 25%:
The retail price will increase by an average of 3.6%, the average gross margin for retailers will drop by 16%, and EBIT (earnings before interest and taxes) will plummet by an average of 30%.
Among them, Morgan Stanley expects that the well-known American retail giant Target will raise prices by 6%, with gross margin falling by 30%, and EBIT crashing by 70%.
This indicates a catastrophic situation for American retailers and suggests that the market fundamentally does not believe that tariffs will remain at their current levels.
