The challenge: The Trump administration’s shifting trade policies—including 90-day pauses on so-called reciprocal tariffs and a similar reprieve on the steepest duties for imports from China—are forcing retailers to make high-stakes inventory bets earlier than usual, just as economic uncertainty tempers consumer spending. (Keep track of the latest tariff policies by reading our Live FAQ: The Impact of Trump’s Tariffs on Consumers, Businesses, and Trade.)

• With little clarity on what tariffs may be in place by fall and winter—or how those policies will affect demand—merchants face a precarious balancing act: Order too much or misread consumers’ preferences, and they risk a glut of goods; order too little, and empty shelves could result.
• Waiting carries its own risks—if higher tariffs kick in after 90 days, retailers could face steeper costs that squeeze their margins.

Pulling forward inventory: To hedge against uncertainty, major players from Amazon to VF Corp. to Urban Outfitters are stocking up, likely pushing their inventory growth ahead of sales in Q2. The strategy echoes the surge in March imports, which helped drive a 14% jump in the US trade deficit before the administration’s “Liberation Day” tariff announcement, per the US Commerce Department.

• Temporary halts on reciprocal tariffs and the steepest duties on Chinese goods have also spurred an uptick in orders from Asia. The Port of Los Angeles, for example, reported imports rose 5.3% YoY in April.
• But those gains may not be enough to avert retail shortages later this year. According to a mid-May CNBC survey of freight and logistics providers, retailers, and consumer goods firms, 59% said they had not yet seen a restart in holiday orders following the trade war pause. Among those who had, just over half (53%) said the orders reflected full holiday volumes.
• That point was echoed in a recent Bank of America Institute report. It suggested metrics such as imports of consumer goods into the US as a percentage of retail sales or retailers’ inventories relative to their monthly sales tell a clear story: Despite the recent rise in consumer goods imports, retailers could still end up with lower-than-needed inventory levels in the coming months, particularly if the surge in imports is only temporary.

Our take: Demand forecasting has rarely been more challenging. Retailers that can read the tea leaves to anticipate how trade policies will evolve—and how consumers will respond—stand to gain an edge. But that’s far easier said than done. Case in point: American Eagle Outfitters recently misjudged what shoppers wanted for spring and summer, resulting in a $75 million write-off tied to excess inventory and deeper promotions.

With the landscape shifting so rapidly, caution may be the smarter strategy. For many retailers, leaning conservative on inventory could be the best hedge against getting caught on the wrong side of volatile policies or unpredictable consumer behavior.

Go further: Check out our tariff coverage, including our reports on the Impact of Tariffs on US Businesses and Impact of Tariffs on Digital Advertising.