President-elect Donald Trump has always been seen as something of a business-friendly president, yet despite that fact, American businesses are already threatening to increase their prices when Trump takes office again in January of 2025.
The reason for this impending price hike? Tariffs.
Tariffs are taxes on goods imported into the country from foreign nations and producers. Trump, in both his first administration as well as his most recent campaign to return to the White House, leaned heavily on his belief that tariffs will spur business production in America.
So why the panic and price hikes from businesses?
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A problem with tariffs — that is, with imposing taxes upon the producers of foreign goods, from cars to farmers to tech companies — is that they offset those taxes by increasing the prices of their goods to the American retailers who sell them. In turn, those retailers then must sell the items at a higher cost to make up that price difference.
As a result of Trump’s promise to bring high tariffs back with his incoming administration (specifically, he has suggested a general 10 to 20% tariff on all imports from all foreign countries, as well as a 60 to 100% tariff on Chinese imports), many companies are preparing to increase prices.
In fact, three major retailers have already announced that their prices will increase:
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As reported by Business Insider, AutoZone CEO Philip Daniele told analysts on an earnings call for the auto-parts company that if the president-elect enacts his proposed tariffs policy, “We will pass those tariff costs back to the consumer.”
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Columbia Sportswear CEO Tim Boyle followed suit, announcing during his company’s earnings call in October that “trade wars are not good and not easy to win,” adding in a comment to The Washington Post that Columbia Sportswear was “set to raise prices” as a result of Trump’s tariffs.
“Coming out of the gate, there would be price increases associated with tariffs that we put into the market” — that’s how Stanley Black & Decker CEO Donald Allen described his company’s response to Trump’s tariff proposals in an October earnings call.
While these companies are the first to publicly announce tariff price-hikes, they are not expected to be the last, with large retailers like Target and Walmart, as well as grocers, expected to feel the pressure to increase prices in the face of high tariffs.
