Although Donald Trump’s tariffs and retaliatory measures from other countries have not yet affected economic growth, American companies are not waiting to take action. Some are introducing “tariff surcharges,” announcing new prices on their websites and in letters to consumers.
Labucq, which sells high-quality footwear made in Italy, addressed the tariffs and their impact on prices in a recent social media post. The company stated that a 20% U.S. tariff on European Union imports, announced by Trump on April 2, would require it to raise prices by 10% starting April 15. The tariffs were temporarily postponed. However, Labucq stated that its prices will increase by about 10% on May 7, noting that the increases are necessary for the company to “remain sustainable.”
Dame, a sexual wellness brand that manufactures adult toys and personal care products, has implemented a “Trump tariff surcharge” of US$ 5, which is automatically added to customers’ online shopping carts at checkout.
Dame CEO Alexandra Fine said the fee does not cover all the extra costs and that the company is still reviewing its prices, as most of its products are manufactured in China. “Our entire industry is in China, so we’re already feeling the impact,” she told CBS MoneyWatch.
Other companies are also mobilizing to raise prices. U.S. chipmaker Micron said it plans to “pass these costs on to our customers.”
Honeywell Building Automation, which designs security and efficiency systems for buildings, announced new prices in early March related to the new tariffs on China, Mexico, and Canada. The company began applying a 6.4% “tariff surcharge” to its building management systems, excluding software and subscription services, stating that the measure was necessary “to mitigate the impact of the tariffs.” Honeywell also said it would eliminate the extra fee “as soon as such tariffs are no longer in effect.”
Other companies are using the situation as a promotional tool. While it’s true that consumers may end up paying more if they wait to buy furniture, electronics, automobiles, and much more, “pre-tariff sales” feed consumer fears that prices may rise and can be an effective way to boost sales, according to experts.
“Tariffs are injecting uncertainty into the market, and when there is high uncertainty, consumers tend to overestimate their losses, so they try to protect themselves from them as much as possible in a very irrational way,” said Denish Shah, marketing professor at Georgia State University’s Robinson College of Business, to CBS MoneyWatch.
Major retailers are putting their own spin on tariff-related promotions. Furniture maker Raymour & Flanigan is encouraging customers to “lock in pre-tariff prices” with a banner on its website. The company, however, does not indicate what kind of price increases it may implement in the future as a result of the new duties.
In times of uncertainty, consumers are prone to buy out of fear.
Source: CBS News