Former Sears Canada CEO Mark Cohen says corporate America is “terrified” by President Donald Trump’s escalating trade war, but CEOs of major retailers are too afraid to speak out against it.
“Few in the industry are talking openly about [isso]for fear of retaliation, which is a form of cowardice,” Cohen, who also retired as director of Columbia Business School’s retail studies program, told Fortune. “They are frantically trying to figure out a solution to this,” he said, describing retailers and manufacturers calling him in a panic under the pressure to rewrite forecasts, protect margins and renegotiate with suppliers.
So far, retailers have been buoyed by their spring and summer efforts to stockpile and reduce the quality of some of their products, allowing them to keep prices low. That’s why back-to-school season has been good for sellers, he said.
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“The party is over now,” Cohen said. “Products you found on a shelf before this holiday season will have been fully encumbered by tariffs.”
Some of the giants, like Walmart, will be able to keep their shelves full and prices low, he added. But for small to medium-sized manufacturers and retailers, “this is a deadly crisis similar to Covid-19.”
“I don’t want to sound alarmist here,” Cohen said, “but the sum total of what Trump is doing is catastrophe personified.”
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Tariffs are disrupting supply chains, forcing price hikes and crushing businesses.
Cohen argued that the tariffs have become a hidden time bomb lodged in the US economy, with their impact delayed by Trump’s negotiation and indecision on some of his Liberation Day tariffs.
Unlike traditional taxes, which are paid at the point of sale, tariffs take effect long before a product hits the shelf.
“Almost everything we consume is being burdened with these taxes, with these tariffs that he created,” he stated. “What Trump did was create a burden on every element of the supply chain.”
Companies must also now advance tariff payments before goods are released through customs; a change, he said, that has already triggered a liquidity crisis in “tens of thousands” of smaller importers.
“It was not part of their financing structure to be able to support this incremental, sudden, inflated cost of doing business,” Cohen said.
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Even big retailers are giving in now. For example, Ikea’s tradition of keeping prices low recently came to an end: a bedroom set jumped $90 in two months, according to the Wall Street Journal.
Cohen explained that for a retailer like Ikea, which relies on a younger, lower-income demographic, the last thing it wants to do is raise prices and damage its brand’s reputation.
If Ikea is raising prices, Cohen added, it’s a sign that the tariffs are affecting everyone.
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“There is no one who can protect themselves from this,” Cohen said.
So far, consumers have taken the fees in stride, with Bank of America estimating that customers spent 0.6% more year-over-year in September.
However, S&P reported last week that companies will incur at least $1.2 trillion more in costs this year than expected due to tariffs, and that large retailers will take the biggest hit at $907 billion.
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Of that $907 billion, about two-thirds of the impact of the tariffs, or $592 billion, is being passed on to consumers in the form of higher prices.
Corporate “cowardice”
Cohen states that the CEOs of these major retailers should step in to defend the broader retail industry from the tariffs and go to the White House to lobby against them.
If he were still the CEO of Sears Canada, he said, he wouldn’t be a “coward” and would be attaching incremental price increases to his price tags so consumers could see that the rising costs were coming from tariffs.
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“I would be very actively involved in efforts to stop this train, because the notion of this continuing for the next three and a half years opens up the possibility of a deep recession here,” Cohen said. “Especially since the world is eminently ready to retaliate.”
Cohen argued that the US is now trapped in a retaliatory spiral. He pointed to China restricting rare earth minerals, Canada responding to tariffs on lumber and automobiles, and European partners now preparing countermeasures that will likely increase costs for U.S. manufacturers.
Trump wakes up every day with a “new fight on his hands”, driving the industry crazy as they cannot plan inventory or prices.
With rising prices suppressing demand, Cohen said many companies will choose to cut orders in the upcoming holiday season, triggering layoffs and forcing the economic slowdown.
He believes the perfect storm of inflation, supply chain disruption, recent labor shocks with labor deportations, and political retaliation is pushing the U.S. into another economic crisis.
“Americans are going to be hit hard,” he said, noting that 70% of Americans already live paycheck to paycheck.
But what alarms him most is the silence from the business community. He thinks perhaps chief executives are privately lobbying Trump, but sees that strategy as a dead end.
“Ikea may well be the canary in the coal mine.”
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