Tariff Wars Between China and the US Could Negatively Impact the Holiday Shopping Season

Many brands are considering moving their calendar up to avoid the dilemma

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The current tariff war between China and the U.S. has put the marketing industry in uncharted—if not unprecedented—waters. No one in our industry has ever had to navigate around a full-fledged trade war before. No longer something in the abstract that we all read about in textbooks, the exchange of tariffs that the Trump administration ignited has created a kind of disruption that marketers have not had to face in generations.

The tariff battle could arguably have the biggest impact of all for certain classes of marketers. If neither side blinks and the tit-for-tat continues, there are several product verticals that could be dramatically affected: consumer electronics, beauty and fashion, apparel, home furnishings. Since these Q4 plans are traditionally centered around the critical holiday shopping season starting with Black Friday, the potential for chaos has brands worried. Expect marketers to at least strongly consider, if not execute, several adjustments to their typical Q4 strategies and plans.

If the tariffs are not removed, a rise in prices for shoppers is unavoidable regardless of how the levies would be absorbed along the supply chain. Right now, several brands have admitted that they are unsure at this point of their ultimate strategy but are strongly considering calendar shifts in their holiday shopping marketing and advertising schedules.

If the tariffs are not removed, a rise in prices for shoppers is unavoidable regardless of how the levies would be absorbed along the supply chain.

On the one hand, look for marketers to perhaps shift budgets from national to local ads. By taking a more granular approach with local ad budgets, brands will be able to employ their dollars in a more immediate manner. With the high-risk potential for disruption in the holiday shopping cycle, brands would be better served by foregoing their usual six-week nationally-focused campaigns before Christmas in favor of a more reactive and flexible approach focused on key local markets.

This shift toward a more granular media plan would also inspire brands to adjust their KPIs to focus on the notion of measuring the incremental visit. By focusing on how many store visits a brand accrued without the campaign versus as a result of the campaign, brands have the opportunity to gain greater control and precision on how their mobile media spending could drive traffic to stores.

This approach could be coupled with a media schedule that starts much earlier in Q4 than what is normal. This would work in tandem with increasing purchasing plans and importing more products before the Chinese tariffs go into full effect, thereby blunting the impact on consumer prices. Shoppers, in fear of getting priced out for normal holiday shopping merchandise, could anticipate rising prices by doing their shopping much earlier.

This adjustment is far from a no-brainer, as companies worry about the strain that the additional inventory will create for their warehouses if they don’t correctly anticipate shopper behavior. Additionally, this scrambling could make competition among brands for the best media deals more intense than it already is for this time of the year.

The other option is to cross your fingers that a ceasefire will be agreed upon between the Xi and Trump administrations in time to not disrupt the typical holiday season. One consumer electronics brand said that it will not go bigger earlier with its media spend because they are locked into new product release schedules and holiday bundles that preclude a reallocation of budgets. Another brand is leaning toward sticking with their normal plans, as going heavy earlier in the quarter might make consumers think the brand is employing a clearance strategy.

In either scenario, the argument to measure success with a greater emphasis on how brands are executing incremental visits with increased priority for local spend would be a smart approach to adopt.