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SCOTUS tariff decision may be too late for the holidays, says Bank of America's Lorraine Hutchinson
11/6/2025, 7:22:42 PM
Economic Summary
- The Supreme Court ruling is important for the future of retail tariffs but may be too late to materially change this holiday season because most holiday goods have already been received and priced.
- If tariffs are upheld, current models stay the same; if struck down, Section 122 could impose a temporary 15% tariff for up to 150 days — retailers estimate about a 20% incremental tariff on holiday apparel/footwear now, so 15% would be only moderately better.
- Consumer elasticity matters: discretionary apparel/footwear purchases are likely to fall for undifferentiated items, while strong brands with product heat may maintain sell-through; overall scenario analysis indicates potential lower unit volumes and margin pressure for the retail group.
Bullish
- Branded, innovative products with strong consumer demand can pass on price increases.
- If the Supreme Court strikes down current tariffs but replaces them with a 15% Section 122 tariff, impact is smaller.
Bearish
- Higher tariffs (estimated ~20% on holiday apparel/footwear) likely raise prices and reduce unit volumes.
- Undifferentiated/basic products face discounting and margin erosion as consumers tighten discretionary spending.
- Overall retail margins are at risk if consumers refuse higher prices, prompting promotions and lower sell-through.
Bullish tickers
BRANDED_APPAREL_RETAILERS
Bearish tickers
APPAREL_AND_FOOTWEAR_RETAILERS
APPAREL_AND_FOOTWEAR_RETAILERS
Bullish
Limited — only differentiated or high-heat brands may pass costs through without meaningful sell-through declines.
Bearish
Higher tariffs (~20% incremental for holiday goods) will push prices up, likely lowering unit volumes and forcing discounting on undifferentiated items, compressing margins.
BRANDED_APPAREL_RETAILERS
Bullish
Strong brands and innovative products can raise prices and sustain full-price sell-through even amid tariffs.
Bearish
Still exposed to overall weaker discretionary demand despite brand strength; not immune to broader margin pressure.
BAC
People mentioned
Lorraine Hutchinson