At US’ biggest retail show, China question never goes away for Walmart, Costco and others

The world’s largest retail show held last week in New York saw a mood of measured optimism amid the bustle, cheap swag and canned smiles – a sense that the worst of last year’s tariff turmoil was over and that Chinese goods would continue to fill Walmart and Costco, even if they had to travel through a third country. “I feel more optimistic for this year,” said Teagan Pollard, an IT expert with TP Industries, which sells vaping equipment from China. “The economy and tariffs have been rough. But something’s got to break, hopefully in the right direction.” The National Retail Federation (NRF) showcase event, held in this nation of shopaholics, saw some 42,000 attendees descend on a space equivalent to five football fields, as corporate booths competed for attention with wine bars, talking robots, couches and extra thick carpeting for clients’ sore feet. “Since the beginning of 2025, people were apprehensive about the way tariffs would play out,” said John Martin, a consultant with supply-chain software company Infios. “In 2026, people have changed their supply chains. So there’s less apprehension.” That has put a spotlight on the American consumer, which chugs along through thick and thin, the secret sauce powering the world’s largest economy. Household consumption accounts for two-thirds of America’s US$31 trillion economy dominated by citizens who gleefully spend every last dollar – and often more – thanks to easy credit. That has left US savings rates currently at around 4 per cent, a 20-year low, driven by high interest rates and inflation. Why US tariffs on China may matter less in 2026 While China’s historic rise is built in part on feeding American shopper appetites with plentiful, inexpensive “stuff”, its own consumers account for just 40 per cent of its US$19.4 trillion economy, well below the global average – in a nation known for scrimping. China’s saving rate is currently at eight times that of Americans. US economists have long recommended that American consumers save more to spur investment and reduce trade deficits, even as Chinese planners want their citizens to save less to check local debt, speculative real estate and global overcapacity. Economic planners and consumer confidence have hardly been helped by last year’s extreme trade turmoil, capped by the high-stakes US-China trade war and US President Donald Trump’s April “Liberation Day” tariffs imposed on nearly 90 countries. But experts believe the worst is over. “The impact of tariffs was a 2025 story, and will fade in 2026,” Michael Pearce, chief US economist at Oxford Economics, told retailers. That did not mean that tariffs would be fully rolled back under Trump – and he had recently found new geopolitical uses for them in his bid to control Greenland – but the extreme roiling should diminish significantly, Pearce said. US tax refunds, lower interest and reduced mortgage rates should keep US consumers spending in 2026, added Mark Mathews, the NRF’s chief economist, as they would buy more furniture and building supplies after property sales. On December 31, Trump reduced tariffs on upholstered furniture, kitchen cabinets and vanities, mostly from China, seeking to reduce inflation. “The outlook for the overall economy is relatively positive, especially if you add investments in artificial intelligence,” Mathews said. Growing political and geopolitical friction was likely to see the disrupter-in-chief turn his gaze to foreign policy areas where he faced fewer impediments, such as Venezuela, analysts predicted. Trump’s meeting with Chinese President Xi Jinping in October – after backing down in the face of Beijing’s strong rare earth hand – with four more summits expected this year, should lend an uneasy stability to the relationship. And a potential US Supreme Court ruling against Trump’s signature – and domestically unpopular – tariff policy, leading into the US midterm elections in November focused on affordability, should make trade battles less attractive. “Trump has multiple pressures he didn’t have before, the Supreme Court ruling on tariffs and political pressure because tariffs are unpopular,” said Jeffrey Moon, founder of consultancy China Moon Strategies and formerly with the National Security Council. “These factors, as opposed to his idea of getting ‘ripped off’ all the time, will temper his ability to carry out a trade war.” China still anchors global manufacturing despite US tariffs Despite the prospect of more trade stability, however, the pandemic and rising US-China tension are changing supply chains permanently, and US importers are advised to continue diversifying their supply chains, said John Eagles, sitting on a raised stool in his Retail Consulting Partners booth near the back of the massive hall. “Don’t rely on one manufacturer,” he said. “It may not only be about manufacturing in China. But if you manufacture in India, you should do more elsewhere so you have options.” Some here have done just that even as others find they cannot easily supplant China. “We moved out of China from Trump’s first presidency eight years ago,” said George Sturua, a manager with Kuhl, which sells high-end outdoor clothing. He said Kuhl placed orders two or three years ahead and had got tired of the whiplash, however good China’s quality might be, and slashed its China sourcing from 70 per cent to around 1 per cent. “We now use India, El Salvador, Bangladesh and Vietnam.” While directly shipped US imports of Chinese goods have declined, they maintain a dominant share in many industries where China cannot be easily replaced. As the world’s factory floor, it supplies some 70 per cent of US toys, 60 per cent of lithium batteries, 35 per cent of electronics and 25 per cent of furniture. Retail behemoths Walmart and Amazon still source 40 to 60 per cent of their general merchandise from China, even as Target has worked overtime to reduce its share to around 20 per cent. Despite rising US-China tension, attendees said their focus was on circumventing roadblocks and doing deals. Raine Li, a sales manager with Shenzhen-based sensor-maker Minew Technologies, sitting in a white booth near the far back wall, said she sensed no ill will directed at her or other Chinese despite rising US-China geopolitical tension. “Everyone’s been very nice,” she said, as she broke down her booth on the show’s last day before heading back to China. “It’s been good, though we need to get a better location next time.” Juggling a bag of giveaways, New York resident Hoi Shing said as a consumer she looked at price and quality, not an item’s origin, although she had seen the impact of tariffs on prices. “A product is a product,” the graphic designer said. “The US and China still need each other. They should stop fighting and get along.” The Budget Lab at Yale estimates that the average US family now pays 18 per cent tariff rates, a nearly eight-fold increase since Trump took office, reducing household purchasing power by some US$2,000 annually. These levels have not been seen since the 1930s. Trump counters that tariffs raise money, create jobs and prosperity, a contention disputed by mainstream economists. Imports from China fell by nearly 20 per cent in 2025 over 2024 levels, as new tariff rates and instability hit hard and importers front-loaded shipments anticipating Trump’s executive orders. But that also launched a multibillion-dollar cat-and-mouse game as Chinese exports were routed through third countries to mask their origin, amounting to US$50 billion, the Brookings Institution and Goldman Sachs estimate. Re-routing is difficult to track. But Chinese exports to Mexico rose sharply in 2025, while Mexico’s exports to the US rose by a similar amount, suggesting trans-shipments at work. Official trade figures have also underestimated the “hidden imports” – as millions of packages valued under US$800 arrived daily from China from the likes of Temu and Shein under a de minimis loophole that remained in place until August. Can Beijing really persuade Chinese to spend? Over the years, meanwhile, China has tried all manner of campaigns, incentives and slogans to get its tight-fisted consumers to spend their hard-earned yuan. In September, Beijing released 19 consumption measures. These encouraged shoppers to splash out for theatre, sports events and medical care and take on more consumer loans, only the latest in decades of such attempts ranging from the 2007 “Home Appliances Going to the Countryside” programme to more recent “high-quality consumption” and “silver economy” campaigns. While the slogans may resonate, however, they do not equate to a good pension or the “three mountains” of education, healthcare and housing. A lack of basics has undercut consumer confidence as Beijing struggles to patch up its frayed social safety net. Psychology was also a factor, experts said. For decades, Chinese were taught to “roll up their sleeves and work harder”, as voiced by Xi during his 2017 New Year’s address. Moving to “roll up your sleeves and spend” does not come easily. Washington has occasionally tried to slow the US spending behemoth, usually during wars, extreme energy shortages or runaway inflation. A notable example occurred during World War II, when Washington issued ration books and preached a “Use It Up, Wear It Out” message. More often, however, US planners have tended to rely on policy tools to change spending habits rather than trying to change behaviour with jingles or otherwise convince headstrong American spenders to open or close their pocketbooks. This at various times has seen the US Federal Reserve raise or lower the Federal Funds Rate to goose or chill consumption and house purchases; seen authorities increase taxes to reduce soft drink or alcohol demand; and seen regulators increase subsidies to spur electric vehicle purchases. More often, politicians tend to encourage Americans to spend to win votes, recently seen in Trump’s “One Big Beautiful Bill”, projected to hand out 44 per cent tax refunds that inject US$150 billion into the retail economy. The churn and litany of shocking daily headlines generated by the Trump administration may be focused in different directions this year, but few expect it to disappear. “Every day there’s new chaos. In general, with the world the way it is, I’ve just had to put blinders on and not listen to so much news,” Pollard said. “You just have to stay lightweight and agile.”

At US’ biggest retail show, China question never goes away for Walmart, Costco and others

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Tariffs may ebb and supply chains may detour, but US shoppers – and giants like Walmart and Amazon – still rely heavily on Chinese goods

Tariffs may ebb and supply chains may detour, but US shoppers – and giants like Walmart and Amazon – still rely heavily on Chinese goods