Kearney: Tariffs Could Represent the End of Consumer Resilience
Consumers have lived through so many “unprecedented” times over the past five years that their flight-or-flight somatic responses may be inoculated against a certain level of disruption.
That was the takeaway from Kearney Consumer Institute’s latest Consumer Stress Index, which surveyed shoppers in 12 countries about how stressed they feel regarding finances, health and education, geopolitics and government, food and the environment, and innovation and technology.
Mounting political pressures and trade policies seem to vacillate daily, but U.S. shoppers’ overall stress levels have only grown 0.2 percent since the global strategy and management consulting firm’s last survey in the fall. Notably, the surveys were run prior to President Donald Trump’s April 2 reciprocal duty announcements, though trade tensions have been percolating for some time, and the rhetoric has been nearly inescapable.
Despite widespread uncertainty about the implications of governmental policy and its long-term impacts on the markets, consumers have evinced a relatively steady level of stress year over year in North America, according to Katie Thomas, who leads the internal consumer think tank at Kearney. Rather than shirking spending—or sacrificing wants and needs—shoppers have been optimizing their budgets as they maintain a wait-and-see approach.
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“What continues to surprise me the most is that we’re seeing much flatter consumer stress compared to a lot of the other indices,” she told Sourcing Journal. “You’re hearing a lot of this voiced stress, but then people are still spending.”
Sure enough, March retail numbers underscore the findings: total retail sales were up 0.6 percent from February, and 4.75 percent from the same period the year prior. The first three months of 2025 saw gains of 4.52 percent from 2024.
But Thomas cautions against misreading these numbers as resiliency; consumers aren’t buoyant, they’re keeping calm and carrying on.
“I would not want the takeaway to be that they’re not stressed about what’s going on financially, with their wallets, with politics—but it’s ebbing and flowing in different ways,” Thomas said. “They’re maintaining this level of stress, and for better or worse, they’ve also gotten used to living in this persistent uncertainty.”
Consumers are indeed aware and anxious about the shifting geopolitical landscape, even if it hasn’t made marked differences in their spending as of yet; Kearney’s data showed that globally, the number of consumers concerned about trade volatility grew 50 percent between Q3 2024 and Q1 2025. “Tariffs could be the end of true resilience of the consumer,” the analyst wrote in her analysis, noting that “all their savvy, thoughtfulness, and optionality” may no longer be feasible once the duties take effect.
One reason that Q1—and especially March retail numbers—may have gone up is because a certain subset of consumers may have made strategic buys in advance of the duty increases.
“Something like 50 percent of retail sales are [generated by] the top 10 percent of consumers, and some people, financially, are able to pull forward purchases to get ahead of the tariffs,” she said. The increased spend may not represent optimism, but practicality and a penchant for planning among a certain subset of shoppers who are able to break with their budgets in the near-term.
Moving forward, though, prices at retail will climb (some already have) and this will inhibit consumer spending. “This stability reflects a moment of calm before the storm,” Kearney’s report said. “These new costs could push many over the edge, as consumers have already absorbed many price increases, changed behaviors, and tried different brands. While wage growth once outpaced inflation, those metrics are converging—and many jobs are seeing limited wage growth altogether.”
When it comes to apparel and footwear, the impacts could be especially pronounced. “I think they’re most exposed to the tariffs and de minimis, so I think you’re going to see the most volatility there,” Thomas said.
This will be a challenging time for decision-makers in the fashion space, but it could yield some unexpected upsides, she believes. “I think it could benefit them, or even the consumer, if that resulted in being more focused, having a tighter merchandise [assortment] and simpler choices,” she said.
“Sometimes with apparel, we see a real proliferation of colorways, of options, and I think you could actually see a little bit of a forced tightening,” she explained. Rather than continuing the pattern of spewing a slew of seasonal, trend-forward designs into the market and seeing what sticks, “maybe this will help move away from some of the lazy innovation and challenge them to nail the basics, the fundamentals, the hero products— and then give them the opportunity to have stronger innovation in a simpler way.”
The generalized level of consumer stress also varied by country, with the U.S. on the lower end of the spectrum for growth. Mexico, by contrast, saw its consumer stress levels up 1.7 percent in the first quarter compared with the fourth quarter of last year, while French shoppers evinced 4 percent higher stress levels from quarter to quarter. Consumers in the United Arab Emirates (UAE) saw 5.6-percent higher stress levels, while Chinese shoppers were 2.7 percent more stressed than the end of 2024. Indian consumers saw their stress levels lessen by 1.3 percent, while those in the United Kingdom (UK) were 2.8-percent less stressed than the previous quarter.
“You’re seeing this movement toward nationalism or populism versus globalization, and a lot of countries right now [have issues with] politics, inflation, all those different things,” Thomas said. “The other caution about comparing country to country is that people are a product of their own environment,” she said, noting that some countries’ populations, like India’s and Mexico’s, tend to give more “optimistic, aspirational” answers to surveys.
