US retailers are warning that President Donald Trump’s new round of trade tariffs threatens to accelerate lay-offs as figures show it is the only sector of the economy to have shed jobs in the past two years.
After a wave of bankruptcies and store closures, data published on Friday showed the retail trade employed 49,000 fewer people last month than in July 2017. Department store, clothing chain and electronics retail workers bore the brunt of the cuts, and the aggregate job losses in the sector would have been higher were it not for hiring by grocers and car dealerships.
In a sign of how the relentless rise of Amazon is transforming the labour market, retail has missed out on an employment boom in other industries. Transport and warehousing added about 370,000 positions over the two-year period, according to the figures from the Federal Reserve Bank of St Louis and the US Bureau of Labor Statistics.
Retail employees are braced for more redundancies in the months ahead. Mr Trump last week said he planned to impose 10 per cent tariffs on $300bn worth of Chinese imports from next month, just as the industry prepares for the crucial Christmas shopping season.
“If you’re bringing in less income and consumer demand starts to go down, there’ll be less reason to employ people,” said Matt Priest, head of the Footwear Distributors and Retailers of America trade body.
Retail analysts stopped short of warning that the latest tariffs would necessarily lead directly to widespread redundancies across the sector. The 10 per cent tariffs are lower than the 25 per cent previously threatened.
However, they warned the additional costs would prove too much for weaker outlets already operating on razor-thin margins and grappling with other pressures from changing consumer tastes and online shopping.
“For those companies that are a bit shaky, this is going to push them over the edge faster,” said Julia Hughes, president of the United States Fashion Industry Association.
Job losses in retail have been driven by bankruptcies of big employers including Sears as well as cost cutting and store closures by others such as Macy’s.
Lowe’s last week put thousands of employees on notice for possible job cuts. The DIY chain said it planned to outsource janitorial work, among other positions, to contractors.
Employment market data published on Friday showed the retail trade lost another 3,600 positions at a seasonally adjusted rate in July.
Within retail, department stores and electronics and appliance stores let go of a net 3,700 and 5,700 employees respectively. Hiring by grocers, which have been less hard hit by internet shopping in the US, offset some of the losses.
Every other main sector of the economy added jobs over the two-year period apart from utilities, where employment was unchanged. Industries from professional services to healthcare continued a hiring spree last month.
Retailers had put warnings over more job losses at the forefront of their lobbying campaign to convince the White House to avoid escalating trade tensions with Beijing.
In testimony earlier in the summer to the Office of the United States Trade Representative after Mr Trump threatened to impose the 25 per cent tariffs, executives said they would be forced to slash costs and also push up prices in response.
Gary Wakley, senior vice-president for footwear sourcing at sportswear company Fila USA, said it would be Americans who “will be the ones to get the pink slips”, a reference to job cuts.
Wade Miquelon, chief executive of Jo-Ann Stores, an Ohio-based fabric and crafts chain with about 870 stores and 23,000 employees, said: “Our company will face tough decisions that could include job eliminations and store closings.”
While retailers have been trying to deal with existing tariffs by shifting sourcing away from China and pushing suppliers to absorb their share of the costs, the industry is warning that the new wave could be harder to manage since it includes a wide range of consumer goods such as trainers that have so far been excluded.
Shares in several of the country’s biggest retailers including Best Buy, Gap and Macy’s sold off heavily last week after Mr Trump issued his latest tariff threat.
Smaller operators are also worried. Trey Kraus, who runs Carltons, a clothing store in Delaware, said he and his wife — who co-own the business — would absorb the resulting hit to margins themselves before they resorted to job cuts. But he added: “Believe me, if you’ve got shareholders involved, jobs will be cut.”