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President-elect Donald Trump’s proposed tariffs could lead to higher consumer prices and a slowdown in spending, analysts warned. As retailers and consumers have begun to experience some relief from inflation, these tariff plans introduce new uncertainties regarding potential price changes during his presidency.
Trump has indicated plans to implement tariffs ranging from 10% to 20% on all imports, with particularly steep tariffs of 60% to 100% on goods from China. Industry groups and analysts caution that these tariffs could result in increased prices for a wide variety of consumer goods, including sneakers and party supplies.
“The adoption of across-the-board tariffs on consumer goods… amounts to a tax on American families. It will drive inflation and price increases and will result in job losses,” said Matthew Shay, CEO of the National Retail Federation (NRF).
A recent NRF study highlighted that Trump’s proposed tariff increases could cause “dramatic” double-digit price hikes across six retail categories: apparel, footwear, furniture, household appliances, travel goods, and toys. For instance, clothing prices could rise between 12.5% and 20.6%.
Tarang Amin, CEO of E.l.f. Beauty—whose products are primarily manufactured in China—mentioned that the company might need to raise prices if the proposed tariffs are enacted.
“We do have pricing power. If we saw we needed to leverage pricing, we would,” he added.
Neil Saunders from GlobalData warned that tariff increases would create significant challenges for retailers who would likely pass these costs onto consumers, leading to reduced spending from cautious shoppers. He noted that while supply chains may eventually adapt to new tariff policies, the short-term impact would be “incredibly disruptive.”
The extent to which retailers will be affected varies based on their sourcing strategies. Companies like Five Below and Crocs are particularly vulnerable due to their reliance on Chinese imports. Conversely, Bath & Body Works—sourcing around 85% of its products from North America—may be less exposed.
Deep discount retailers like Dollar Tree face challenges as their fixed-price model complicates passing on increased costs to consumers.
For consumers, these proposed tariffs may lead to increased costs for various goods—from car repairs to toys—just as inflation appears to be cooling down. Some companies have already announced intentions to raise prices in anticipation of these additional costs.
Analysts identified companies at risk due to their reliance on imports affected by these tariffs, including Constellation Brands (makers of Corona Extra), Diageo (importer of tequila and Scotch), and Mondelez (producer of snacks).
Matt Priest, CEO of Footwear Distributors and Retailers of America—a group representing major brands like Nike—indicated that adult and children’s shoes would also see price increases if Trump’s tariff proposals are implemented. He also expressed scepticism about relocating production back domestically.
With potential price increases looming over a wide range of goods, the economy may shift once again, challenging the recent progress made in curbing inflation. Stakeholders will need to closely monitor these developments, as the decisions made in the coming weeks could significantly impact consumer spending and overall economic stability.