Proposed tariffs could raise prices for consumers

For retailers and consumers finally feeling some relief from inflation, President-elect Donald Trump’s tariffs proposal introduces fresh uncertainty around how prices could change during his presidency, analysts said Wednesday.

Trump, who NBC News projects won a second term in a decisive victory, said during his presidential campaign that he would impose a 10% to 20% tariff on all imports, including tariffs as high as 60% to 100% for goods from China.

Companies, retail trade groups and industry analysts have warned the move could fuel higher prices on a wide range of Americans’ purchases such as sneakers and party supplies.

“The adoption of across-the-board tariffs on consumer goods and other non-strategic imports amounts to a tax on American families,” National Retail Federation CEO Matthew Shay said in a statement Wednesday. “It will drive inflation and price increases and will result in job losses.”

Earlier this week, the NRF released a study on the impact of Trump’s proposed tariff increases and said they would lead to “dramatic” double-digit-percentage price spikes in nearly all six retail categories that the trade group examines. Those categories are apparel, footwear, furniture, household appliances, travel goods, and toys.

The cost of clothing, for example, could rise between 12.5% and 20.6%, the analysis found.

The CEO of E.l.f. Beauty, which primarily relies on China to manufacture its beauty products, told CNBC in a Wednesday interview it could 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. “It will depend on what we see in terms of the tariffs. It depends on the magnitude of the tariffs.”

In a research note Wednesday, GlobalData managing director Neil Saunders said tariff hikes would “create an enormous headache” for retailers, which are likely to pass those costs on to consumers. The result is likely to be softer spending from already price-conscious shoppers.

“Despite Trump’s assertions to the contrary, tariffs are paid by the companies or entities importing goods and not by the countries themselves. This means the cost of buying products from overseas, whether directly or as an input for manufacturing, would rise sharply,” said Saunders. 

“Given the trade between Chinese manufacturers and US retailers, a strict tariff policy would mean retailers initially either taking a massive hit on profits or being forced to put up prices, which would fuel inflation and dampen retail volume growth,” he said.

Over time, supply chains would adjust to this change in tariff policy but it would be “incredibly disruptive” in the short term, said Saunders.

“The small hope is that the tough talk on tariffs is more of a negotiating ploy and that what is finally implemented will be…