Deep inside U.S. economy, more sticker prices start going up due to tariffs, and inventory is headed down
On the surface of the U.S. economy, prices are higher. Thelatest inflation dataout on Friday from the government showed a bigger uptick than forecast. On Thursday, Nike said it took a $1 billion hit due to tariffs and the fact thatprice increases have yet to be implemented.
Inside the U.S. economy, within distribution networks that manage inventory, there are fewer items overall due to the trade war, but more goods on which sticker prices are going up.
"We are now seeing multiple customers increasing pricing," said Ryan Martin, president of distribution and fulfillment for ITS Logistics.
While price tags are placed on items at the manufacturer, Martin said over the past month his company has started re-ticketing "millions of units of products for many customers," items ranging from apparel to consumer products in the warehouse being prepped for eventual delivery or immediate transport to stores.
Depending on the product, price increases range from 8%-15%, he said.
"This is creating additional inflation," Martin said. It is happening in e-commerce as well, he said, though the price change is reflected online, not on the product.
A new survey from the Footwear Distributors and Retailers of America for Q2 shows 55% of respondents expect their average retail price to rise between 6%-10% in 2025 as a result of tariffs.
Martin says the last time he saw this amount of re-ticketing was during the pandemic, and it was much higher then.
"Everything was getting more expensive at that time, transportation, labor and quantities of product," he said. "We saw increases across all products, including food and beverage," he said. "Re-ticketing was between 30%-40%."
It's not just higher prices but less inventory
With current concerns about trade uncertainty and consumer softness, retailers and manufacturing clients are managing inventory by shrinking SKU counts and importing fewer SKUs they are keeping. The Bureau of Economic Analysis reported that gross domestic product shrank by 0.5% in the first quarter of 2025.
"The overall inventory footprint is smaller," said Martin. "You are looking at three months of inventory on hand now versus six."
Supply chain data from the warehouse sector and the growing number of empty shipping containers at ports are pointing to a more mild peak season (the summer buildup of inventory for the back-to-school and holiday shopping periods).
Warehouse inventory levels are down 6% month over month, according to the Logistics Managers' Index.
Comparing readings from the first half of June to later in the month, growth in inventories started to slow down, which suggests that an increase in early June was temporary, according to Zachary Rogers, associate professor of supply chain management at Colorado State University. "Because of how long it takes inventories to move through systems, we haven't seen any big shifts in transportation yet," said Rogers. "Warehouse capacity did move from mild contraction to mild expansion."
The data for the full month of June is not in yet, but Rogers said it is highly unlikely the results would change in any meaningful way. "We're far enough along that we basically know where they'll end up," he said.
Rogers explained the mild expansion seen earlier in the month was consistent with the containers that were processed at the ports. U.S. importers have been hesitant to pull forward full ocean freight orders because of the tariffs. The 50% tariff on Chinese goods is still too high for many retailers, even after a recent pause in higher tariffs PresidentDonald Trumphas threatened on Chinese goods.
The West Coast ports are now seeing asmall bumpin containers starting to arrive for the holidays. But based on the Port of Los Angeles Optimizer, which tracks the ocean trade destined for the Ports of Los Angeles and Long Beach, July imports will be lower than July 2024.
"This is notable because July moving into August is when we would expect to see the numbers going up," Rogers said.
On the East Coast, the situation is different.
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