President Donald Trump has always been seen as something of a business-friendly president, but despite this, American businesses are already threatening to increase their prices if Trump takes office again in January 2025.
The reason for this looming price hike? Tariffs.
Tariffs are taxes on goods imported from other countries by manufacturers. Mr. Trump, in his first administration and in his current campaign to return to the White House, has relied heavily on his belief that taxes will stimulate business creation in America.
So why the fear and price rise from businesses?
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The problem with tariffs — that is, with imposing taxes on foreign manufacturers, from automobiles to farmers to technology companies — is that they offset these taxes by increasing the prices of their goods to American consumers who sell them. Also, those sellers have to sell the goods at a higher price to make up the price difference.
Because of Trump’s promise to bring back high tariffs with his upcoming administration (in particular, he proposed a 10 to 20% tax on all imports from other countries, as well as a 60 to 100% tax 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 Danieli told analysts in an earnings call at the auto parts company that if the president enacts his tax bill, “We’re going to bring that customer back to the customer.”
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Columbia Sportswear CEO Tim Boyle followed suit, announcing during his company’s October call that “trade wars are not fair and they are not easy to win,” adding in a statement to the Washington Post that Columbia Sportswear is “prepared to raise prices” as a result of Trump’s tariffs.
“Coming out of the gate, there will be inflation related to the prices we put in the market” – that’s how Stanley Black & Decker CEO Donald Allen explained his company’s response to Trump’s tax proposals in an October earnings call.
Although these companies are the first to publicly announce price increases, they are not expected to be the last, with large retailers such as Target and Walmart, as well as grocers, expected to feel the pressure to increase prices in the face of higher taxes. .