The trend: The volatile and unpredictable nature of the Trump administration’s tariffs weighed on brand margins last year and is expected to remain a meaningful drag in 2026.

The examples:

• Those levies cut 100 basis points from Levi Strauss’ gross margin in FYQ4, which ended November 30, and the company expects tariffs to cut another 150 basis points this year, leaving margins flat YoY.
• “Tariffs are only just starting to hit us,” said Paul Vogel, CFO of VF Corp., the parent of The North Face and Vans. VF saw the first meaningful tariff impact flow through its gross margin in FYQ3, which ended December 27, costing the company more than $100 million.
• Whirlpool said it absorbed roughly $300 million in tariff costs last year, contributing to a 220-basis-point margin hit as the appliance industry largely delayed passing higher costs on to consumers.

The implications for retailers and brands: Tariffs leave brands with two bad choices: eat higher costs and take the margin hit, or raise prices and risk dulling demand. Many initially chose the former, but pressure is mounting to do the latter. As margin strain persists, 32% of small business owners say tariffs have pushed them to raise prices, per an Intuit survey, and several prominent brands, including Levi Strauss and VF, are also moving toward price increases.

That shift puts certain categories squarely in the crosshairs, especially big-ticket and discretionary items like apparel, footwear, home goods, and appliances. Brands with clear differentiation or must-have appeal may be able to push costs through, but others risk getting squeezed from both sides as higher prices prompt shoppers to wait, trade down, or skip the purchase altogether.

There’s also legal uncertainty to contend with. The US Supreme Court could strike down some tariffs—particularly those imposed under IEEPA authority—as soon as next month, offering temporary relief. Even then, the administration is likely to reach for other tools to levy duties, meaning tariff risk is more likely to move around than go away.

Taken together, price increases could curb demand at an already fragile moment for consumers, widening the gap between winners and losers across categories.