Uncertainty Looms: Tariffs Proposal Threatens to Upend Prices
As the country begins to breathe a sigh of relief from inflation, a new wave of uncertainty is on the horizon. President-elect Donald Trump’s tariffs proposal has sparked concerns about how prices could change during his presidency, analysts warn.
A Tax on American Families
Trump’s plan to impose a 10% to 20% tariff on all imports, including tariffs as high as 60% to 100% for goods from China, has raised alarms among companies, retail trade groups, and industry analysts. They warn that this move could lead to higher prices on a wide range of everyday purchases, from sneakers to party supplies.
Dramatic Price Spikes Ahead
A recent study by the National Retail Federation (NRF) found that Trump’s proposed tariff increases would lead to “dramatic” double-digit-percentage price spikes in nearly all six retail categories examined. The cost of clothing, for example, could rise between 12.5% and 20.6%.
Retailers Caught in the Crossfire
Retailers are likely to pass the increased costs on to consumers, which would fuel inflation and dampen retail volume growth. E.l.f. Beauty, which primarily relies on China to manufacture its beauty products, may be forced to raise prices if the proposed tariff hikes take effect. “We do have pricing power. If we saw we needed to leverage pricing, we would,” said E.l.f. CEO Tarang Amin.
Supply Chain Disruption
Over time, supply chains would adjust to this change in tariff policy, but it would be “incredibly disruptive” in the short term. Some companies, like Bath & Body Works, which sources about 85% of its products from North America, would be less vulnerable. However, deep discounters like Dollar Tree, which imports many of its items from China, would be exposed due to their fixed-price-point business model.
Companies Scramble to Diversify
Companies like Yeti Holdings and E.l.f. have been working to diversify their supply chains and move manufacturing outside of China to reduce their reliance on the region and its risks. By the end of 2025, Yeti has pledged to move about half of its production to regions outside of China.
Sticker Shock Ahead
Tariffs could contribute to more sticker shock on a wide variety of purchases — from car repairs to toys — just as inflation cools. Some companies, including AutoZone, have already told investors that they will raise prices to cover the additional costs. Customers could also pay more for a six-pack of beer, a bottle of Scotch, or even a pack of Oreos, thanks to tariffs.
A Warning to Consumers
As the country navigates this new landscape of tariffs and trade policies, one thing is clear: consumers will ultimately bear the brunt of the cost. With prices already on the rise, the added burden of tariffs could be devastating for American families. As Matt Priest, CEO of Footwear Distributors and Retailers of America, said, “It would be counterproductive to then turn around and go back to pulling one of those inflationary levers, which would be additional tariffs, at a time when the consumer’s telling all of us, both politically on last night’s results, as well as from a consumer perspective: ‘We don’t want higher prices.’”
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