Good morning.

For years, U.S. trade officials have argued that some importers have been playing a game of hide-and-seek with customs authorities — routing goods through third countries, using shell companies, and understating the value of imports to avoid tariffs.

Now the Trump administration wants to change that.

President Donald Trump has signed a sweeping customs enforcement order that will tighten requirements for importers, increase penalties, and deploy AI tools to identify potential tariff evasion.

The move could reshape how goods enter the United States and add a new layer of compliance pressure for importers, retailers, and logistics providers.

Let’s dive into today’s edition.

Amazon has introduced the next generation of its Proteus warehouse robot, capable of understanding natural language commands from workers.

Key Details: The autonomous robot can transport goods across fulfillment centers without requiring programming or technical inputs, marking another step in Amazon's push to integrate AI more deeply into its logistics operations.

Automation Time: The announcement comes as Amazon continues investing heavily in automation while reducing parts of its corporate workforce. The company plans to deploy the upgraded Proteus robots across Europe starting in 2027 and is also expanding other robotics technologies, including touch-sensitive robots and automated tote-handling systems.

More Humans: Despite concerns that AI could replace jobs, Amazon executives argue the opposite is happening inside warehouses. The company says growing use of robotics has increased demand for skilled roles such as robotics technicians and engineers, while highlighting ongoing challenges in finding enough workers with the technical skills needed to support increasingly automated fulfillment networks.

The rapid adoption of GLP-1 weight-loss drugs is triggering a surge in apparel returns as consumers shed pounds and frequently change clothing sizes. According to The Wall Street Journal, retailers say shoppers are increasingly ordering the same item in multiple sizes and returning those that no longer fit, creating new costs across the apparel industry.

Key Numbers: According to returns management firm Narvar, the share of apparel exchanges involving customers sizing down reached a record 14.6% in 2025 and has risen every year for the past three years. Some retailers report sharp increases in returns, with online suit seller FlexSuits seeing returns jump 50% over the past year.

Increasing Expenses: Industry experts estimate that even a modest increase in return rates can cost large retailers tens of millions of dollars due to higher shipping, labor, and inventory costs.

U.S. services-sector activity accelerated in May, signaling continued economic growth despite signs of weakness in the labor market. The Institute for Supply Management's services purchasing managers index (PMI) rose to 54.5 from 53.6 in April, exceeding economists' expectations and marking another month of expansion for the sector.

New Rise: Growth was supported by continued strength in new orders, while supplier delivery times remained stretched for an 18th consecutive month, indicating ongoing supply chain pressures. At the same time, the prices index climbed to its highest level since August 2022, with businesses reporting higher costs for diesel, gasoline, oil, and related commodities.

Future Outlook: However, hiring activity remained weak. The employment index contracted for a third straight month as many companies implemented hiring freezes or chose not to replace departing workers. The report suggests that while demand for services remains resilient, businesses are becoming more cautious about workforce expansion amid rising costs.

Macy’s reported its first quarterly sales increase in nearly four years and raised its full-year forecasts, helped by strong demand for luxury apparel, accessories, and beauty products. The retailer’s sales rose 1.8% to $4.68 billion in the quarter ended May 2, marking the end of 15 consecutive quarters of revenue declines and beating analyst expectations.

Increased Sales: The company said higher-income consumers continued to spend despite economic uncertainty, driving strong performance at its premium banners. Comparable sales jumped 10.2% at Bloomingdale's and 6.4% at Bluemercury, while overall comparable sales increased 3%. Fragrances, women’s apparel, shoes, and handbags were among the strongest-performing categories.

Turnaround Story: Led by CEO Tony Spring, Macy’s has focused on higher-end brands, full-price sales, store investments, and closing underperforming locations as part of its turnaround strategy. The retailer raised its fiscal 2026 earnings forecast to $2.00–$2.20 per share and slightly increased its annual sales outlook.

Amazon will begin enforcing stricter handling-time requirements for sellers who fulfill orders themselves, aiming to improve delivery accuracy and speed across its marketplace.

What’s Happening? Starting June 29, sellers whose products are consistently shipped faster than their listed handling times will be required to update those estimates or risk Amazon automatically adjusting them.

Key Details: Handling time refers to the period between when a customer places an order and when the package is handed over to a carrier. Amazon said more than 87% of seller-fulfilled orders in the U.S. are shipped within one day, but many sellers still provide longer delivery estimates than necessary. The company noted that reducing promised delivery times by just one day can increase sales by an average of 5%.

What’s Next? Under the new policy, Amazon will monitor seller performance and may automatically manage handling times for non-compliant products while offering temporary protection from late-shipment penalties. The move is part of Amazon’s broader push to improve delivery speed and customer experience, alongside investments in same-day and 30-minute delivery services.

Ulta Beauty reported strong first-quarter results, with ecommerce sales growing at a mid-teen percentage rate and significantly outperforming physical stores. The beauty retailer's net sales rose 11.1% year over year to $3.16 billion, while comparable sales increased 5.3%, driven by higher spending and more customer transactions.

Power of AI: The company credited its digital momentum to investments in artificial intelligence, omnichannel capabilities, and expanded fulfillment options. CEO Kecia Steelman said early results from the retailer’s new AI shopping assistant, developed with Google, have been encouraging.

More Channels: Ulta is also betting on social commerce and personalization to drive future growth. The retailer recently launched a storefront on TikTok Shop and reported strong engagement from its first shoppable livestream.

Ulta also expanded same-day delivery through a partnership with Uber Eats and added buy now, pay later options through Klarna.

Chinese e-commerce giants are facing mounting pressure as rising logistics costs and weaker consumer demand slow the growth of low-cost online shopping exports.

What’s Happening? Platforms such as Temu, Shein, and AliExpress are being squeezed by higher air freight expenses linked to the Iran conflict, adding to challenges already created by U.S. tariffs and the removal of customs exemptions for low-value imports.

Key Details: China’s low-cost e-commerce exports fell 10.9% year-over-year in April to $9.81 billion, marking the fifth consecutive monthly decline. Sellers are increasingly passing higher shipping costs on to consumers, while slowing demand in the U.S. and Europe is making it harder to sustain the rapid growth these platforms enjoyed over the past several years.

Alternate Plans: In response, companies are shifting away from direct air shipments from China and expanding overseas warehouse networks to reduce transportation costs. Shein, for example, has expanded its European warehousing footprint as freight rates climb.

Dollar General reported stronger-than-expected first-quarter results as inflation and economic uncertainty pushed more consumers toward discount retailers. Sales rose 3.4% year over year to $10.79 billion, while profit increased to $444.1 million, prompting the company to raise its full-year earnings forecast.

Stellar Numbers: Comparable sales increased 2%, supported by growth in consumables, seasonal merchandise, apparel, and home products. The company also reported market share gains and raised its annual earnings outlook to $7.20–$7.45 per share.

New Trend: The retailer said higher customer traffic drove growth across all income groups, with the largest increase coming from households earning more than $100,000 annually.

CEO Todd Vasos said rising fuel costs and financial pressure are causing consumers to cut back on spending and prioritize affordability, particularly in rural communities where Dollar General has a strong presence.

Lululemon lowered its full-year profit forecast and issued weaker-than-expected second-quarter guidance, signaling continued struggles in its key U.S. market. The athletic apparel retailer said demand remains soft as consumers cut back on discretionary spending, while rising tariffs and higher investments are expected to pressure margins.

Rise and Fall: Revenue in the United States, Lululemon’s largest market, fell 4% during the first quarter, while sales growth in China remained strong at 23%. The company also warned that slower sales trends will require additional seasonal markdowns despite efforts to increase full-price purchases. Shares fell about 11% in after-hours trading following the announcement.

Big Picture: The outlook cut comes as Lululemon prepares for a leadership transition, with incoming CEO Heidi O’Neill set to take over in September. The retailer is also facing intensifying competition from brands such as Alo Yoga and Vuori, while recent product launches have failed to generate the momentum the company expected.