President Trump’s tariffs have many industries scrambling around coming up with creative ways to not pass on the extra costs to their customers.
The new tariffs introduced by Mr. Trump last week include a 10% universal tariff, as well as so-called reciprocal tariffs on more than 60 countries that are trade partners with the U.S. The tariffs will be additive, meaning that imports will face the universal tariff of 10% plus the specific reciprocal import levies targeting each nation.
Tariffs are intended to raise the cost of imported goods, making them less competitive compared with domestically manufactured products, according to the Home Furnishing Association.
However, when tariffs are enacted, retailers are forced to choose between raising their prices or relying on already slim profit margins to absorb the increased cost of inventory.
Short Term and Long-Term Impacts
Tariffs will adversely affect retailers ─ some in the short term and some in the long term.
“Maybe the tariffs will get reversed, or maybe retailers will change their origin of manufacturing to avoid them, but companies can’t pivot at the drop of a dime,” says Brendan Heegan, founder and CEO of Boxzooka. “As a result, there will be both short- and long-term repercussions as long as the tariffs are in place.”
Economists are predicting that consumers and businesses will likely encounter higher inflation, according to CBS News, with price hikes on everything from food imports like coffee and chocolate to iPhones and other electronics manufactured outside the U.S.
Which Industries Will Be Impacted by Tariffs?
Businesses across all industries will face some sort of impact due to the tariffs, depending on where they are importing from.
For instance, after Mr. Trump added tariffs to imported washing machines during his first term, the median price of an appliance jumped more than 11%, adding about $86 to the cost of a new unit, according to University of Chicago researchers.
Electronics will be a huge target, with nations such as China, Taiwan and South Korea among those targeted by Trump’s reciprocal tariffs. Especially with most iPhones still being manufactured in China, it will cost both retailers and consumers.
Other industries that will be impacted include automobiles, clothing, alcohol, furniture, coffee, chocolate and more.
What Lies Ahead?
Consumers across the country are flocking to retailers to buy what they can before price increases begin. According to Reuters, U.S. retail sales increased by the most in more than two years in March as households stepped up purchases to avoid higher prices from tariffs.
Retail sales increased 1.4% last month, the largest gain since January 2023, after an unrevised 0.2% rise in February, the Commerce Department’s Census Bureau said. Economists polled by Reuters had forecast retail sales, which are mostly goods and are not adjusted for inflation, accelerating 1.3%.
Receipts at auto dealerships, building material and garden equipment stores, restaurants, sporting goods shops and more all accelerated in March. However, this is simply the calm before the storm.
Once tariff price increases finally go into effect, consumers will likely pull back on their spending. Many economists predict that both businesses and consumers will struggle in the near future.
