President-elect Donald Trump’s proposed tariffs have already begun to upend businesses in several industries and many are taking action to safeguard their profits. The tariffs, which include a 10-20% tax on all imports and a potential 60-100% on goods from China, are causing significant concern – and the costs are likely coming right to consumers’ wallets.
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Philip Daniele, the CEO of AutoZone (NYSE:AZO), has stated unequivocally that if these tariffs are imposed, consumers will bear the expense. On a recent earnings call, Daniele said, “If we get tariffs, we will pass those tariff costs back to the consumer.” The company expects to raise prices even before the tariffs take effect, anticipating how these new policies will impact its margins.
Many other businesses, particularly those that depend significantly on foreign suppliers, are also preparing for possible price increases, so AutoZone is not the only company preparing for these changes.
Steve Madden (NASDAQ:SHOO) is one of the first companies to make a move. The shoe retailer, which sources 70% of its products from China, announced that it will cut its reliance on Chinese production by half, moving to places like Vietnam, Cambodia and Mexico. Even with these changes, customers should anticipate price increases as Steve Madden manages the higher expenses related to the effects of tariffs and changing supply chains.
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Columbia Sportswear (NASDAQ:COLM) also raised concerns about how tariffs would make it more difficult to maintain the affordability of its products. According to CEO Tim Boyle, the company may be forced to raise prices to cover the additional tariff charges.
The National Retail Federation expressed similar views, describing the tariffs as “a tax on American families” and warning that the cost of daily goods like furniture, shoes and clothes might rise sharply.
According to their research, a $90 pair of sneakers might cost $106-116 and a $100 coat could cost up to $21 more. Footwear companies, in particular, are worried – since nearly 99% of all shoes sold in the U.S. are made abroad, it will be tough to move production to the U.S. anytime soon.