Tariffs are going to increase prices. That much we know for sure.
In fact, some prices are already rising because of the additional tariff on Chinese goods levied in February by President Donald Trump. Tariffs targeting Canadian and Mexican products also went into effect last month.
What’s not known is how quickly the broader set of tariffs, if enacted again, would hit different categories of goods.
Those tariffs went into effect early Wednesday, but by midday, Trump reversed course, putting a 90-day pause on all trading partners who haven’t retaliated against the U.S. That doesn’t include the tariffs on Chinese goods, he said in a post on Truth Social.
Tariffs on China will increase to 125% because of the country’s “lack of respect” it has shown global markets, he wrote.
Now, consumers get to play the waiting game. Standard & Poor’s crunched numbers based on Trump’s plan last week and concluded clothes could increase up to 37%, toys 30% and TVs 10%.
“It’s going to filter relatively quickly if those tariffs do materialize,” said Gregory Daco, chief economist for Ernst & Young’s Parthenon.
Clothing will be hit hard
Tariffs could raise apparel prices in three to six months after they are enacted, said Liza Amlani, principal at Retail Strategy Group. So if they go into effect in 90 days, the increases could hit during the holiday season.
“The manufacturing base for clothing and footwear is in locations where tariffs are high, and there is no way retailers can simply swallow the increased costs,” Saunders said.
Synthetic materials, often found in leggings and other athleisure items, would be more likely to show higher prices because most are coming from a south Asian country, Amlani added.
Little choice but to pass on, executives say
An Ernst & Young (EY) survey of 4,000 executives found that half would be willing to pass on up to two-thirds of the added costs from tariffs onto their consumers.
Chuck Gregorich, CEO of Net Health Shops in Eau Claire, Wis., told Bloomberg News his company would have to raise prices on the fire pits and other home goods it sells by as much as 25% once inventory needs replenished.
He said he was speechless over Trump’s tariff plans.
“I couldn’t even talk I was so bummed,” Gregorich said.
He’s hoping he’ll know exactly what the cost of tariffs will be when he needs to place his next overseas order.
For larger retailers, there’s more room to “absorb the pain” of tariffs, Bagchi said.
“It’s not going to flow through one-to-one because there’s margin baked in. If the tariff is 30% or 25%, it’s not going to be a 25% increase on the shelf. It might be a 5% or 10% because at each step somebody can take some hit,” Bagchi said.
Small businesses such as Gregorich’s have less flexibility in keeping prices low.
In an email sent to customers on Monday, Nurture&, a nursery furniture company, urged those in the market for a nursery glider, crib, dresser or kids bed to make purchases now. The company is honoring its lower pricing through April.
“We’re in a spot where we’re already seeing some companies implement price increases due to increased tariffs,” said Jill Gruys, chief merchant for Nurture&.
Electronics still mostly made in China
Electronics are another area of concern for price-conscious shoppers. About 60% of Best Buy’s products, by cost, come from China.
It’s unclear how or when these additional tariffs on China will affect Best Buy’s pricing and sales. The company carries an average of six weeks of inventory. But officials at the Richfield-based retailer expressed concern about the threat of tariffs during its most recent earnings call.
Grocery prices will be higher
In the grocery department, in addition to produce, shoppers could expect to pay higher prices for seafood, chocolate and rice, retail analyst Burt Flickinger said.
Anticipate Halloween candy prices to be much more expensive, he added.
Dakota Elbaum, 31, said he already can’t afford to shop at Lunds & Byerlys, where he is a cheese specialist. He was picketing Tuesday for a better contract in front of the store’s Maple Grove location with fellow members of the United Food & Commercial Workers Local 663.
“I am struggling to buy groceries,” said Elbaum, who makes $22.50 an hour and lives with his girlfriend and a roommate in a two-bedroom apartment in Richfield.
