Tariffs Threaten to Cost Gap Up to $150 Million in 2025
Gap Inc. is bracing for a potential financial hit of up to $150 million this year as a result of ongoing U.S. tariffs, the company has disclosed.
According to Gap, if the current 30% tariffs on Chinese goods and 10% duties on most other imports remain unchanged, the retailer could face additional costs ranging from $100 million to $150 million in 2025.
The announcement sent Gap shares tumbling 15% in after-hours trading, underlining investor concerns about the impact of trade policies on major retailers.
The uncertainty stems from fluctuating developments in tariff regulations. A federal appeals court on Thursday temporarily halted a prior ruling from the Court of International Trade that had blocked several tariffs implemented under former President Donald Trump, further clouding the outlook for import-reliant businesses.
The timing is especially critical for Gap, which owns brands such as Old Navy, Banana Republic, and Athleta. The company is currently navigating a modest turnaround, having posted a 2% increase in same-store sales last quarter – its fifth straight quarter of growth.
Despite the looming tariff costs, Gap CEO Richard Dickson told CNBC that the company does not plan to pass the added expenses onto consumers through broad price hikes.
“Based on what we know today, we do not expect there to be meaningful price increases or impact to our consumer,” Dickson said.
This approach contrasts with that of other major retailers. Macy’s, for instance, has begun selectively raising prices on certain brands and product categories. “We’re making selective price increases… because we believe the value equation for the customer is still very relevant,” Macy’s CEO Tony Spring said during a recent earnings call.
Retail giants like Walmart, Target, and Home Depot have also indicated that they may adjust prices to absorb rising import costs, as the retail sector grapples with the ongoing volatility of global trade policy.
