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CNBC
30-05-2025
- Business
- CNBC
Trump tariffs would still 'pinch' consumers even if trade court block holds, economist says
The fate of many of President Trump's tariffs is uncertain after a string of court rulings this week. But even if a court block on country-specific tariffs is upheld, others that would remain on the books — for products like steel and automobiles — are still expected to cost consumers almost $1,000 a year, according to a new analysis by the Yale Budget Lab. "It does pinch" consumers' wallets, said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration. Tariffs are a tax paid on imports, paid by U.S. entities importing the good. Businesses are expected to pass on at least some of those costs to consumers. However, the dollar impact of those remaining tariffs is "a far cry" from what it would be if the country-specific tariffs were to remain, he said. The U.S. Court of International Trade on Wednesday blocked country-specific tariffs, including a 10% baseline tariff on most nations and separate levies on Canada, Mexico and China tied to allegations of fentanyl trafficking. A three-judge panel found Trump exceeded his authority by invoking the International Emergency Economic Powers Act to impose those import duties. An appeals court temporarily paused the order on Thursday as it reviews the case. However, 25% tariffs on steel, aluminum, automobiles and auto parts are still in place, with some carve-outs, as well as certain tariffs on China imposed during Trump's first term and expanded during the Biden administration, Jennifer McKeown and Stephen Brown, economists at Capital Economists, wrote in a note Thursday. Those tariffs were imposed using different legal authorities. If the lower court's order holds, those remaining tariffs would cost the average household $950 of purchasing power in 2025, according to the Yale Budget Lab analysis published Thursday. That amounts to a 0.6% increase in consumer prices, it found. More from Personal Finance:Trump administration axes Biden-era barrier for crypto in 401(k) plansTrade schools may be a winner of battle between Trump, HarvardCourt order challenges Trump's plan to move federal student loans Another way consumers can view this legal development: The initial court ruling, if upheld, would save households more than $1,800 this year, said Tedeschi. That's because the average household would lose about $2,800 in 2025 if the country-specific tariffs were to stay on the books, Tedeschi said. In that case, consumer prices would rise about 1.7% this year, he said. McKeown and Brown estimate the court ruling would lower the effective tariff rate to 6.5% from 15%. It was 2.5% at the start of the year, they said. "The most direct impact" of the remaining tariffs will be on car buying, Tedeschi said. Car prices would likely rise about 8% this year and 5% over the longer term, he said. But steel and aluminum are inputs in a swath of consumer products, from homebuilding to household appliances. The Supreme Court may be the final arbiter for Trump's country-specific tariffs, a process that may take "many months," according to McKeown and Brown. Additionally, "it would be unlikely to mark the end of the tariff war given the various other routes through which the Trump administration could impose tariffs," they wrote. The Trump administration has also signaled an intent to put duties on additional products like pharmaceuticals, semiconductors, copper and lumber. Yesterday's court decision was a "landmark ruling," Tedeschi said. "I don't expect it'll be the end of things."
Yahoo
21-05-2025
- Business
- Yahoo
Tariffs trigger price hikes: Shoes, clothing and toys to get more expensive this summer
Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the past four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press, part of the USA TODAY Network. But consumers can expect price spikes on clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price increases at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Consumer protection: Crackdown on hidden fees when booking hotels and buying tickets hits in time for summer Overall, we could see an average per-household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't see a price increase. Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could rise anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story is still unfolding. As of May 12, the U.S. and China agreed to a reduction in tariffs for 90 days as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs − but with a trade deal between the United States and the United Kingdom and newly proposed auto rebates − the average effective tariff rate would have been 27.6%. Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic-buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, probably will see price increases on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for household items for bathrooms, including items made of plastic; children's car seats and strollers; and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers. All are items for which China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." He added, "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the United States is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Consumers saw inflation hit a four-year low as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets and used cars and trucks. Used car and truck prices were down 0.5% month over month in April after a 0.7% drop in March. Year-over-year prices for used vehicle were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. How much of the higher tariffs will be passed along directly to consumers remains unknown − and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90-day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cell phones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Expect a high-priced summer as tariffs hit apparel and footwear Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
19-05-2025
- Business
- Yahoo
Tariffs trigger price hikes: Shoes, clothing and toys to get more expensive this summer
Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the last four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press. But consumers can expect big price spikes to hit clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom, and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price hikes at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Consumer protection: Crackdown on hidden fees when booking hotels and buying tickets hits in time for summer Overall, we could see an average per household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't face a price hike. Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could go up anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year, due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers that they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement sent to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story remains ongoing. As of May 12, the U.S. and China agreed to a temporary reduction in tariffs for 90 days, as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs — but with a trade deal between the U.S. and the U.K. and newly proposed auto rebates — the average effective tariff rate would have been 27.6%. Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, likely will see price hikes on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for various household items for bathrooms, including items made of plastic; children's car seats and strollers, and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers currently. All are items where China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." And Trump added: "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the U.S. is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Consumers saw inflation hit a four-year low, as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets, used cars and trucks. Used car and truck prices were down 0.5% month over month in April, following a 0.7% drop in March. Year-over-year used vehicle prices were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. How much of the higher tariffs will be passed along directly to consumers remains unknown — and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90 day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cellphones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Expect a high-priced summer as tariffs hit apparel and footwear Sign in to access your portfolio
USA Today
19-05-2025
- Business
- USA Today
Tariffs trigger price hikes: Shoes, clothing and toys to get more expensive this summer
Tariffs trigger price hikes: Shoes, clothing and toys to get more expensive this summer Show Caption Hide Caption Trump tells Walmart to 'eat the tariffs' instead of raising prices U.S. President Donald Trump said on Saturday that Walmart should "eat the tariffs" instead of blaming duties imposed by his administration on imported goods for the retailer's increased prices. Consumers can expect big price spikes to hit clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a non-partisan research center. Consumers saw inflation hit a four-year low, as the consumer price index rose year-over-year by 2.3% in April. Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Spikes in shoe prices could get people talking Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the last four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press. But consumers can expect big price spikes to hit clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom, and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price hikes at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Consumer protection: Crackdown on hidden fees when booking hotels and buying tickets hits in time for summer Overall, we could see an average per household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't face a price hike. How soon will some prices go up? Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could go up anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year, due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers that they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement sent to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story remains ongoing. As of May 12, the U.S. and China agreed to a temporary reduction in tariffs for 90 days, as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs — but with a trade deal between the U.S. and the U.K. and newly proposed auto rebates — the average effective tariff rate would have been 27.6%. Should you rush to buy to avoid tariffs? Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." Dolls, microwaves and more to see price hikes Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, likely will see price hikes on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for various household items for bathrooms, including items made of plastic; children's car seats and strollers, and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers currently. All are items where China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." And Trump added: "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the U.S. is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Inflation isn't bad now Consumers saw inflation hit a four-year low, as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets, used cars and trucks. Used car and truck prices were down 0.5% month over month in April, following a 0.7% drop in March. Year-over-year used vehicle prices were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. What will happen next when it comes to tariffs? How much of the higher tariffs will be passed along directly to consumers remains unknown — and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90 day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cellphones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor.
Yahoo
16-05-2025
- Business
- Yahoo
How shoppers might want to calculate the cost of higher tariffs
Skyrocketing prices might not be top of mind for many consumers this spring, especially in light of significantly lower gas prices at the pump in early May. But many economists warn that consumers should get ready to pay more for some things as soon as summer. So maybe it isn't a bad idea to start thinking about back-to-school shopping even before summer vacation begins. Some shoppers might want to keep an eye on Memorial Day sales to knock some gifts off a Christmas list. Sure, it sounds strange. But it's one more weird twist in the new economic realities associated with much higher tariffs in 2025 on many goods that consumers buy. Can we expect to see price hikes of 15% or more on shoes or a sweater? Maybe. If so, we could be talking about the kind of consumer indignation we saw when egg prices soared. Eggs are up 18% over the last four months or 49% in a year, according to Ernie Tedeschi, director of economics at The Budget Lab at Yale University. Price hikes related to tariffs are not showing up yet in many goods, like clothing, because the items aren't perishable and retailers continue to sell some "pre-tariff inventory," Tedeschi told the Detroit Free Press. But consumers can expect big price spikes to hit clothing and shoes this year, according to the latest forecast from the Budget Lab at Yale, a nonpartisan research center that provides analysis of federal policy proposals for the U.S. economy. Shoe prices are expected to be 15% higher and apparel prices are expected to be 14% higher in the short run, according to the Budget Lab. And those prices could increase more in the long run. The report issued May 12 estimated the effects of all U.S. tariffs and foreign retaliation implemented in 2025 through May 12, including the effects of the lower rates with China, the deal with the United Kingdom, and the auto tariff relief that could apply to automakers. Right now, it's hard to judge whether we'll see a flood of price hikes at every store or shortages on the shelf. "We saw during the avian flu crisis that not all grocery stores hiked egg prices," Tedeschi said. "Some simply chose to run out of eggs. So, price rises in the end might look less painful than some feared, but that doesn't necessarily mean that consumers haven't been hurt in other ways." Overall, we could see an average per household consumer loss of $2,800, the Budget Lab reported, as a result of higher tariffs. The price level from all 2025 tariffs rises by 1.7% in the short run. Tariffs are viewed by economists as regressive taxes. How much individual households will actually see their real incomes, or after-tax incomes, fall will vary based on their spending patterns and what tradeoffs a consumer is willing to make, such as substituting a brand that didn't face a price hike. Exactly when we'll pay higher prices on individual items will vary. Some prices on some items could go up anywhere from a week to a couple of months. "When the United States imposed tariffs on Chinese washing machines in January 2018," Tedeschi said, "consumer washing machine prices didn't rise until April that year, due to a combination of retailer inventory and supply chain lags." Hallmark surprised those who collect Keepsake ornaments by advising customers that they will pay more than the listed price in the 2025 Dream Book, which was handed out at stores in April. Prices were raised in early May. In a statement sent to the Free Press, Hallmark said: "We are committed to maintaining fair pricing across our portfolio and are fortunate to manufacture 75% of our core products in our Kansas-based manufacturing facilities, including greeting cards and gift wrap." But Hallmark acknowledged that it "made the necessary decision to adjust pricing on select imported products from our gift and ornament collections that are impacted by the current economic climate." On May 15, Walmart said it would have to start raising prices on many goods later in May and June to address higher costs associated with tariffs. Already, the company said, the price of bananas at Walmart rose to 54 cents a pound, up from 50 cents, thanks to higher tariffs. The Budget Lab analyzed the May 12 tariff rates as if they stayed in effect in perpetuity. We all know the tariff story remains ongoing. As of May 12, the U.S. and China agreed to a temporary reduction in tariffs for 90 days, as negotiations continue. "The May 12 changes to the China rate alone reduce the negative economic impact of all 2025 tariffs to date by 40%," according to the Budget Lab. Even so, the Trump trade war has meant that U.S. consumers still face an overall average effective tariff rate of 17.8%, the highest since 1934, according to the estimates from the Budget Lab. Without the lower China tariffs — but with a trade deal between the U.S. and the U.K. and newly proposed auto rebates — the average effective tariff rate would have been 27.6%. Consumers could have a bit of calculating to do when it comes to how much they might be willing to buy early and how willing they might be to hold off shopping. "The problem with trying to bulk purchase items in a time of uncertainty is that many other consumers are doing it, too," Tedeschi said. "This increase in demand can itself lead to the very higher prices consumers are trying to avoid." He added that it is substantially uncertain where China tariffs in particular are going to end up over the summer. "It's easy to imagine them rising or falling from the current 30%," Tedeschi said. "That said, if there are significant tariffs on China still in place this summer, it's highly likely they will put upward pressure on apparel and electronics prices for back-to-school shopping." His advice: Don't panic buy. Take more time to research and comparison shop, including researching import content for potential large purchases like appliances and cars. And he said: "Pay attention to the news and the data; ignore the noise and the vibes." More: Student loan debt collection restarts: How to avoid garnished wages, tax refund seizures More: How tariffs are impacting a Detroit scrapper and the metals precious to US manufacturing Over the next few months, experts say, consumers could experience sticker shock when they shop for a long list of items. Tariffs are not just about higher prices on many cars or trucks. Jason Miller, who keeps a close eye on inventories as an associate professor of logistics in the department of supply chain management at Michigan State University's Eli Broad College of Business, noted that there's lag between when products are imported and when they hit store shelves. But he expects that price tags on many goods will start reflecting the impact of tariffs by June and July. Consumers, he said, likely will see price hikes on clothing and apparel; footwear; toys and games; and small electrical appliances, including microwaves, toasters and mixers. Price hikes, he said, might also be expected for various household items for bathrooms, including items made of plastic; children's car seats and strollers, and some types of furniture. For items like toys, Miller said, percentage increases in the double-digit range seem probable. The same's true, he said, with car seats and strollers currently. All are items where China plays a major role in exporting goods to the United States. The Toy Association, which has more than 900 members, is urging the U.S. government to grant a reprieve from tariffs on toys imported from China to make sure toys available for the holiday season. The Toy Association wants U.S. leaders to secure "zero for zero" tariffs on toys through bilateral negotiations with trading partners. Trump famously stated: "Maybe the children will have two dolls instead of 30 dolls." And Trump added: "Maybe the two dolls will cost a couple of bucks more than they would normally." The New York Post ran a Page One cover May 1 declaring: "Skimp on the Barbie." Miller doesn't expect many supply chain snarls in the weeks ahead, as a rush of imports into the United States is expected now. "The biggest unknown now," Miller said, "is what happens with the remaining reciprocal tariffs ... at the end of the 90-day July pause." "The other unknown," Miller said, "is what happens to domestic demand for manufacturing." Regional Federal Reserve Bank manufacturing surveys showed significant weakening of new orders in the past few months, especially in April, including upward pressure on the cost of imported materials and supplies. As of May 13, a 10% tariff on goods entering the U.S. is to stay in place but, according to Reuters, U.S. officials remain in talks with several countries to lower additional tariffs imposed by Trump. The 10% tariff was imposed on nearly all countries by Trump on April 2. Consumers saw inflation hit a four-year low, as the consumer price index rose year-over-year by 2.3% in April, according to the May 13 report by the U.S. Bureau of Labor Statistics. Prices fell on some items in April, including airline tickets, used cars and trucks. Used car and truck prices were down 0.5% month over month in April, following a 0.7% drop in March. Year-over-year used vehicle prices were up 1.5% in April. Gasoline prices were down 0.1% month over month, following a 6.3% drop in March and a 1% decline in February. Gas prices were down 11.8% over 12 months through April, according to the Labor Department. PNC Chief Economist Gus Faucher noted in his report that consumers saw little indication in the April CPI report of tariffs causing higher goods prices. But he warned that tariffs are likely to drive prices and inflation up over the next few months. "Even with the recent agreement between the Trump administration and China to reduce the most onerous import taxes, tariffs against all U.S. trading partners are much higher than they were at the beginning of 2025," Faucher said. Diane Swonk, KPMG's chief economist, noted in a report: "This could be the last benign inflation report for a while." Make no mistake, consumers and business remain extremely uncertain about what's next when it comes to tariffs. On May 8, for example, major footwear manufacturer Wolverine Worldwide stated in its earnings report that it would not provide a full-year 2025 outlook as a result of "uncertainty around tariffs and related macro-economic conditions." The company, which is based in Rockland, also then said that it is withdrawing its 2025 guidance issued on Feb. 19. Wolverine Worldwide stated in its footnotes that risk factors ahead include price increases, risks associated with foreign sourcing, tariffs, as well as economic conditions, such as inflationary pressures, employment rates and interest rates. Wolverine Worldwide shoe brands include Merrell, Saucony, Hush Puppies, Chaco and Stride Rite. Wolverine Worldwide is also the global footwear licensee of the Cat and Harley-Davidson brands. How much of the higher tariffs will be passed along directly to consumers remains unknown — and we don't know just yet where tariffs will end up. "The recent de-escalation with China to lower tariffs from 145% to 30% for 90 days is welcome news," according to an economic outlook issued May 13 by KPMG. "That will help to restart trade between the two countries, but it is unclear whether tariffs will rise or drop at the end of the pause." The KPMG report indicated that the Federal Reserve "is not expected to cut rates until December due to a bout of stagflation, a period of rising inflation coupled with escalating unemployment." We've not dealt with the troubling mix of a sluggish economy and high inflation at the same time since the 1970s. "Uncertainty is just off the charts," said Charles Ballard, professor of economics emeritus at Michigan State University. Even the tariffs under the 90 day pause, he said, are much more restrictive than what was in place months ago. "Trade barriers were very low when President Trump took office. He has contended again and again that other countries put up severe barriers to American exports. There is very little truth to that," Ballard said. Some cases exist, he said, such as Canadian tariffs on dairy products. "But for the most part, we had low tariffs on imports from other countries, and other countries had low tariffs on our exports." Overall, though, he said, American businesses are feeling whiplash as the expected tariffs have changed quickly in 2025. Does a company go ahead and place an order, Ballard asked, knowing that it may face a very different tariff when it is filled from what it faces now? Baby strollers, baby car seats, cellphones, laptops and toys, he said, are some of the items that face the greatest uncertainty. Shopping for back-to-school or Christmas now might be a good idea, Ballard said, if you're concerned about shortages or higher prices. "But it's very hard to predict exactly where the prices will be, because we don't know what the policy will be in the future," Ballard said. Contact personal finance columnist Susan Tompor: stompor@ Follow her on X @tompor. This article originally appeared on Detroit Free Press: Prices to go up on shoes, clothing, toys and more as tariffs hit Sign in to access your portfolio
