Key takeout
Some companies give their customers all the expenses, while others eat a portion of the costs themselves.
Some companies are beginning to send emails to customers to let them know that prices are rising due to tariffs. One package company emailed customers saying it was raising prices in response to “trash can fire” tariffs.
If you have questions about whether you will ultimately pay the cost of Donald Trump’s new import tax, businesses have a clear answer: customers.
This is based on recent research and anecdotes collected by the Federal Reserve Bank and released this week. Individual findings released this week from the Fed’s previous post bases in several regions found that businesses in their area have at least inherited some of the tariff costs to consumers.
Most businesses in New York and upstate New Jersey have given customers at least some of their customs fees. A third of the manufacturer and 45% of the service companies were passed along along the entire cost. An April survey of local businesses by the Atlanta Fed found that most companies pass at least some of the tariff fees to their customers. Nearly 20% say they will pass the full cost of the hypothetical 10% tariff.
On top of that, the compilation of the Federal Reserve’s national report, “Beige Book,” was packed with stories about companies that raise prices to compensate for the increased cost of imports.
The survey and report shed light on issues that have had a major impact on household budgets and the economy. How much does Trump’s tariff boost the prices of everyday goods and services?
Since February, Trump has imposed dizzy and frequently changing import taxes, including 10% tariffs on items from most countries and 25% tariffs on many foreign cars. On average, goods imported from overseas face 15.6% tariffs, Yale Budget Lab calculated last week.
The question of who would pay for those tariffs was politically explosive. Amazon elicited a barrage of criticism from the White House in April after it raised plans to show tariff costs in online stores prices. Similarly, Trump blows up Walmart after executives said tariffs would push prices up, and the president demanded retailers “eat” the tariffs.
Dear and precious customer…
Recent research suggests that customers will at least cut some of their tariff costs, so businesses are giving customers bad news ahead of time. Companies from various industries have emailed customers, warning them of price increases and denounced tariffs.
For example, Typology, a company that sells skincare products imported from France, has emailed its customers to absorb much of the cost of customs duties, but has implemented a “conservative price adjustment” of 0.5% to 4.5%. Tony, the maker of audio players for children, said he is increasing the price of some of the figurines from $14.99 to $19.99.
Bas, which sells imported packages, went viral on LinkedIn last month due to an outspoken email about unpredictable tariff policies.
Investopedia via LinkedIn
“The situation with this tariff is a complete trash can and we are all burned,” the company’s marketing team wrote. “The costs are rising and unfortunately our prices need to follow.”
