Trump’s tariffs and the battle for brands to maintain customer loyalty

Omnichannel

Brands that can adapt their loyalty strategies to meet these new challenges will not only survive but have the opportunity to build even stronger, more resilient relationships with their customers.

June 5, 2025 by Kenn Kennedy — Head of North America, Antavo

Brand loyalty is one of the most valuable assets a company can build, but it’s never given freely; it’s earned over time through consistent quality, positive experiences, and emotional connection.

Loyal customers don’t just buy more; they advocate for the brands they love and remain resilient in the face of competition.

Loyalty has always been hard-earned, but amidst economic uncertainty, there is a risk that it could soon become a luxury — one that very few can afford.

As the U.S. reintroduces steep tariffs under President Donald Trump’s renewed trade policies, the ripple effects are being felt far beyond manufacturing, travel and consumer goods.

The average American consumer is about to experience price hikes across nearly everything they buy, all at once. Faced with higher costs on everything from fashion to food, many Americans will be forced to abandon the brands they’ve cherished for years — not because they want to, but because they have to.

For loyalty and customer engagement teams, there’s an obvious issue: how do you retain customers when rising costs erode both consumer trust and the value of loyalty programs?

From supply chains to shelves

Trump’s latest tariffs — some as high as 245% on Chinese goods — are already disrupting supply chains and driving up consumer prices across key categories like electronics, apparel, and household goods. Retailers are scrambling to adapt, with many shifting sourcing away from China or absorbing higher costs, which can lead to decreased product variety and longer lead times.

Consumer behavior is changing, too. Many shoppers are delaying non-essential purchases, switching to own-brand or budget-friendly alternatives, and shopping for domestic products to avoid tariff-driven price hikes. This shift in spending habits is particularly damaging for loyalty programs that rely on consistent purchasing patterns and brand affinity.

Rising pressure

For brands, the increasing cost of fulfilling rewards — whether it’s free shipping, exclusive discounts, or product perks — is becoming unsustainable. The impact of tariffs will make it even harder for loyalty marketers to compete on the benefits they can afford to give their loyal customers if the cost of fulfilling those benefits continues to rise.

Companies are also affected differently by tariffs based on their global locations, resulting in an uneven playing field among competitors. Brands with more domestic supply chains or diversified sourcing strategies may be able to maintain their loyalty perks, while others will be forced to scale back, risking customer attrition.

Lessons from the past

This isn’t the first time that an economic event has led consumers to reevaluate their brand loyalties. During the recession in 2008 and the pandemic in 2020, spending dropped, and as the crises concluded, consumers emerged from a phase of non-spending and took the opportunity to reevaluate who they shop with, which brands they’re loyal to, and who align with their values.

The tariffs have sparked similar behavior, and brands that have built their success on values such as quality, transparency, and sustainability now face a stark choice — they must either absorb the costs or pass them along. Passing along the cost may lead loyal customers to feel betrayed, while absorbing it could impact sentiment among shareholders.

In the face of widespread uncertainty, one thing remains clear: brands that fail to adapt their loyalty strategies risk permanently losing customers and damaging their bottom lines and reputations in the process. Transparency about pricing, ethical sourcing, and value alignment has become a critical factor in gaining (and maintaining) consumer trust.

Tips for achieving loyalty success in a tariff-driven economy

1. Prioritize personalization: Use data analytics to tailor rewards and communications to individual customer preferences, enhancing perceived value. Brands are doubling down on retention by offering consumers more personalized rewards and easier access to benefits. This is where AI is invaluable, helping to save on resources and driving hyper-personalized loyalty programs at scale and profitability.

2. Clear communication: Be open about the reasons for price changes or adjustments in loyalty benefits to foster trust and understanding. When things change, customers notice, and they want answers — this is a time to be upfront and honest, so don’t bury your head in the sand. Also, demonstrate empathy by acknowledging the economic pressures consumers are facing and showing how your brand is working to support them. Whether it’s through more flexible point redemption options or installment payment plans, customers will remember which brands stood by them during tough times.

3. Leverage emotional and values-based loyalty: As tariffs cause economic strain, customers are more likely to shift from transactional loyalty to values-based decision-making. This gives brands an opportunity to double down on purpose-driven marketing and loyalty strategies. For example, brands that demonstrate environmental sustainability or social responsibility can differentiate themselves in a crowded, price-sensitive market. Loyalty programs that allow customers to donate points to causes, support small businesses, or opt into carbon-neutral shipping are increasingly resonating.

Right now, we’re seeing a clear shift in shopping behavior. People are being more selective. They’re not shopping as often — maybe they’re holding off, waiting for the right moment — but when they do spend, they’re spending more. Bigger baskets, higher average order values. So for retailers, every single transaction matters more than ever.

That’s where loyalty really becomes a strategic lever. It’s not just about driving repeat purchases anymore — it’s about making sure every purchase counts. Are you capturing data from that transaction? Are you using it to make the next interaction smarter? Are you rewarding the customer in a way that makes them feel seen, understood, and likely to come back?

In a world where consumers are cautious, loyalty can be the difference between a one-time spike and long-term retention. Trump’s tariffs are more than a trade policy — they’re a catalyst for a fundamental shift in consumer behavior and brand loyalty. For loyalty teams, the path forward requires agility, transparency, and a renewed focus on delivering genuine value to customers.

Brands that can adapt their loyalty strategies to meet these new challenges will not only survive but have the opportunity to build even stronger, more resilient relationships with their customers.

About Kenn Kennedy

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