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Illustration: Aïda Amer/Axios

Retailers are under pressure to raise prices on a slew of everyday products. The problem: Americans have become too cheap to let them.

Why it matters: Our obsession with cheap stuff is tying the hands of some of the nation's biggest corporations — like Target, Macy's and Walmart — at a time when they're grappling with new tariffs and can't risk offending shoppers during the all-important holiday season.

Where it stands: While low unemployment and rising wages have been a boon, U.S. consumers are still worried about price increases — and retailers are scrambling for ways to avoid passing on tariff-related costs to their customers.

  • What they're saying: "Whether the consumer can afford to pay more doesn't matter," David French, senior vice president of government relations at the National Retail Federation, tells Axios. "The consumer is always going to be attracted to the lowest price ... retailers know this."

A few examples:

  • Macy’s attempted to pass along those tariff costs — making items like luggage, furniture and other household products more expensive — but the company faced consumer backlash and may reverse those hikes. There was “very little appetite for those cost increases,” CEO Jeff Gennette said in a recent call with Wall Street analysts.
  • Target is putting intense pressure on its suppliers that buy products from China to hold the line on prices. “Our expectation is that you will develop the appropriate contingency plans so that we don’t have to pass price increases along to our [customers],” Mark Tritton, Target's chief merchandising officer, wrote in a memo to suppliers.
  • Prices have ticked higher on some products at Walmart, but executives there say they view price increases as an absolute "last resort."

"We constantly want downward pressure on pricing ... And we'll pull all the other levers that we have to get there," Walmart's chief merchandising officer Steve Bratspies said this month at a Goldman Sachs retail conference.

Similarly, at Macy's, executives are looking at "mitigation strategies" to avoid raising prices again — even though the most recent round of tariffs, and the impending round, more directly target a range of consumer goods.

Apparel prices haven't gone up meaningfully in at least 7 years, according to the Bureau of Labor Statistics' consumer price index. For some items, like toys and cosmetics, prices have actually been trending lower.

  • “We’ve trained customers to be so cheap," Sucharita Kodali, a retail analyst at Forrester Research, tells Axios. “Amazon is a symptom of the consumer obsession with low prices,” not the cause.
  • Cheaper items are the result of more sourcing of goods from overseas, where production costs are lower.

But now, companies that rely heavily on parts or items from China are facing an unprecedented threat to decades-old supply chains. U.S. companies, which bear the cost of tariffs, are looking at ways to offset these big expenses.

  • Companies like Kohl's have lowered Wall Street's expectations for its profit margins — already pressured by other in-store promotions — as it tries to avoid any customer impact from tariffs.

The bottom line: Economists estimate the trade war could increase costs by hundreds of dollars for the average U.S. household. Companies trying to avoid price hikes aren't sure how long they can hold out if the trade war drags on — or, worse, intensifies.

Go deeper

Chris Cuomo accuser: On-air "hypocrisy" spurred report

Journalist Chris Cuomo. Photo: Gilbert Carrasquillo/GC Images

A woman who accused fired CNN journalist Chris Cuomo of sexual misconduct said Sunday she decided to come forward after learning of his comments about women who made similar accusations about his brother. He denies her allegations.

Why it matters: Her attorney Debra Katz said in a statement that she heard "the hypocrisy" of his on-air words about his brother, former New York Gov. Andrew Cuomo, and was "disgusted by his efforts to try to discredit these women," so "retained counsel to report his serious sexual misconduct against her to CNN."

Updated 3 hours ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: CDC director says number of U.S. Omicron cases "likely to rise" — Two years of COVID-19 — Prior coronavirus infections may not protect well against Omicron.
  2. Vaccines: Data demonstrates most-vaccinated counties less vulnerable to worst of COVID — Omicron adds urgency to vaccinating world — Omicron fuels the case for COVID boosters.
  3. Politics: Nevada to impose insurance surcharge on unvaccinated state workers — New Jersey GOP lawmakers defy statehouse COVID policy — Oklahoma sues Biden administration over Pentagon vaccine mandate.
  4. World: Vaccine mandates lose steam in the U.S. while Europe doubles downWHO: Delta health measures help fight Omicron — COVID cases surge in South Africa in sign Omicron wave is coming.
  5. Variant tracker: Where different strains are spreading.

Vulnerable Democrats: Less Trump talk

Illustration: Aïda Amer/Axios

Vulnerable House Democrats are convinced they need to talk less about the man who helped them get elected: President Trump.

Why it matters: Democrats are privately concerned nationalizing the 2022 mid-terms with emotionally-charged issues — from Critical Race Theory to Donald Trump's role in the Jan. 6 insurrection — will hamstring their ability to sell the local benefits of President Biden's Build Back Better agenda.