Tariffs increase the cost of doing business outside the US. However, even companies manufactured in the US can be affected. This is because many people rely on foreign parts and materials as intermediate goods.
Whether or not consumers ultimately feel the impact of these higher costs can vary depending on industry and product.
According to Craig Fuller, CEO of supply chain consultant FreightWaves, many negotiations have arisen between US importers, overseas producers and all intermediaries before tariffs are collected.
Some companies, including Target, Best Buy and Hyundai, say they will pass on some of the higher costs of customs duties to their customers. Meanwhile, Walmart encountered resistance as he was trying to pressure Chinese suppliers to cut costs in anticipation of tariffs.
Other companies, particularly luxury sellers, may charge huge markup on goods they import into the US, and ultimately decide that they can already live by hitting high profit margins, Fuller said. Other companies enjoying large market stocks will also decide whether to absorb higher costs to maintain their dominant position.
Even businesses that absorb tariff costs and don’t raise prices still have costs. These companies will have less money to invest in the growth of their business. This can have a negative impact on the labour market if it leads to layoffs and additional jobs.
Trump downplays the impact of prices on prices. Trump asked about raising the prices of vehicles after foreign automakers announced a 25% tariff on car imports.
