Jakarta – The tariff policies implemented by U.S. President Donald Trump are beginning to hit back at American retail giants. Major companies like Estee Lauder and Ralph Lauren are being forced to take extreme measures, from raising prices to increasing advertising budgets targeting the wealthy, to cover rising costs due to increasingly stifling tariffs.
The retail sector, which is in direct contact with consumers, is among the hardest hit by Trump’s tariff policies, which have triggered rising input costs and suppressed demand. To survive, these companies are now having to dig deeper into their pockets to change their business strategies in a market increasingly divided between those who can afford to and those struggling with the high cost of rent and food.
Tapestry, the parent company of the luxury brand Coach, reported increased margins this quarter thanks to sales of the Tabby handbag, even as they increased their marketing budget by 40%. However, the impact of tariffs is beginning to erode the performance of the Kate Spade brand, also under the Tapestry umbrella.
“This investment helps strengthen our brand-building efforts,” Tapestry CEO Joanne Crevoiserat told Reuters on Thursday, February 5, 2026.
This large-scale investment is being made just as inventories of goods subject to tariffs begin to flood company warehouses, with the peak impact of the tariffs expected in the coming months. However, investors are beginning to question the effectiveness of the increased advertising spending by Estee Lauder, Ralph Lauren, and Canada Goose amid economic uncertainty.
“For companies that have been unstable, there is a higher chance of risky earnings reports emerging,” said Illia Kyslytskyi, Portfolio Manager at Singapore-based Yaru Investments.
“In terms of marketing budgets, companies need to be wary of potential declines in demand in the affordable luxury segment,” Kyslytskyi added.
Margins Eroded and Profit Projections Plummet
Estee Lauder is now trying to shift to premium cosmetics and perfume categories by raising price tiers under the leadership of CEO Stephane de La Faverie to revive performance after being hit by weakening demand. However, the burden of tariffs remains a real threat to the company’s long-term profits.
Estee Lauder estimates that the tariff policies will erode their annual profit by US$100 million (Rp 1.68 trillion) in the second half of this year. The company also projects that its current quarter margin will shrink by 50 basis points, triggering a 20% drop in its share price on Thursday.
A similar situation is being experienced by New York-based Ralph Lauren, where quarterly operating costs jumped 12% year-on-year due to large advertising spending at the Wimbledon and US Open tennis tournaments. The company predicts that margins will shrink between 80 and 120 basis points in the current quarter due to high spending and a difficult operating environment in North America.
Meanwhile, Canada Goose failed to meet its quarterly profit targets, causing its share price to plummet, as the company has been hesitant to restore financial projections previously withdrawn due to tariff uncertainty. The company continues to increase marketing investment despite its fundamental conditions being scrutinized by market analysts.
“We think they also need to reinstate quarterly or at least annual guidance to give the investment community confidence that the continued spending increase will normalize so that revenue declines stop,” said Laurent Vasilescu, Senior Analyst at BNP Paribas Equity Research.
The situation reflects a broader trend highlighted by recent reports. According to a CNN analysis, the U.S. Average effective tariff rate has risen from 2.4% before President Trump took office to 16.8% by the end of 2025, peaking even higher last spring. While consumer price increases have been moderate so far, businesses are signaling they are likely to pass on a greater portion of their tariff costs to consumers this year.
The impact isn’t limited to luxury goods. Heavily imported consumer goods have seen some of the largest price increases, with items like tomatoes and coffee experiencing significant changes. The U.S. Relies heavily on imports for coffee due to the difficulty of domestic cultivation, with Brazil being the top source according to U.S. Department of Agriculture data.
The broader economic implications are significant. President Trump has argued that his steep import taxes are necessary to bring back wealth that was “stolen” from the U.S., narrow America’s trade deficit, and bring manufacturing back to the country. However, upending the global supply chain has proven costly for households facing rising prices, as importers typically attempt to pass on the higher costs to their customers.
The situation is further complicated by a pending Supreme Court ruling on Trump’s use of emergency powers to levy tariffs, which could dramatically reshape his tariff policy. The uncertainty surrounding this ruling is contributing to the cautious approach taken by companies like Canada Goose, which are hesitant to provide firm financial guidance.
The challenges faced by these retail giants underscore the complex and far-reaching consequences of the Trump administration’s trade policies, impacting not only businesses and consumers in the U.S. But also global commerce and supply chains.
