Sharp tariff proposals could cause prices of apparel, toys, furniture, household appliances, footwear, and travel goods to spike “significantly” next year, according to the National Retail Federation.
President Donald Trump announced that 25% tariffs on imports from Mexico and Canada, along with increased levies on China, will take effect Tuesday.
“Tomorrow — tariffs 25% on Canada and 25% on Mexico. And that’ll start,” Trump told reporters in the White House’s Roosevelt Room on Monday.
Chinese exports will receive an additional 10% tariff on top of the 10% the Trump administration already imposed earlier this year. The Mexico and Canada tariffs were supposed to go into effect in February but were postponed for a month after negotiations with Trump and leaders in each nation.
“Trump’s proposed tariff policies, especially at higher rates, would disproportionately harm middle- and low-income Americans while failing to deliver meaningful economic benefits,” said Monica Morlacco, an assistant professor of economics at the University of Southern California.
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Analysts estimate a $1,700–$2,600 annual reduction in after-tax income for the typical U.S. household, with lower-income families facing the most significant relative losses, Morlacco said. “This is because tariffs function as a regressive tax, disproportionately impacting households that spend a higher share of their income on goods,” she added. “For the median household, this would represent a 4.1% decline in after-tax income.”
“There’s still a lot of uncertainty about what goods might face new tariffs, and even when tariffs are implemented, their impact on consumer prices will depend on retailer pricing strategies, currency adjustments, supply chain adjustments, and the availability of U.S. substitutes,” said Mark Haefele, the global chief investment officer at UBS Global Wealth Management.
Haefele noted that a 25% tariff does not directly translate to a 25% increase in final product costs. “Tariffs are applied at the dockside, whereas other costs like transportation, marketing, and retail space are incurred domestically. We estimate that a 25% import tariff would only result in an average 10% increase in the final cost of a product.”
Items Expected to See Price Hikes
Personal Electronics
“They are already a high-ticket item, and many consumer electronics are manufactured in China or use components sourced there,” said Vivian Tu, the host of the podcast “Networth and Chill” and the author of “Rich AF: The Winning Money Mindset that will Change Your Life.”
Ed Brzytwa, the vice president of international trade at Consumer Technology Association (CTA), added, “We found that a universal tariff of 10% and a 60% flat tariff on all imports from China will cause huge price increases for U.S. consumers. Laptops and tablets are predicted to rise by 46%, video game consoles by 40%, and smartphones by 26%.”
Household Appliances
“Appliances such as refrigerators and washing machines are expected to see price increases of nearly 20% because of higher costs for imported materials like steel and aluminum,” said Chip Lupo, a writer and analyst at WalletHub.
A study by researchers at the University of Chicago and a Federal Reserve Board Governor found that washers cost an average of 12% more after Trump imposed tariffs on them in 2018.
Tools and Furniture
“Home improvement items like tools are often imported from China, and companies like Black & Decker and Walmart have already indicated potential price increases,” Haefele said.
Ikea has already announced that the tariffs will push its prices higher.
Cars and Motorcycles
“The automotive industry is heavily reliant on imported components, so tariffs on parts and materials, such as steel, would raise production costs domestically, while tariffs on imported vehicles would directly increase retail prices,” Morlacco said.
Wells Fargo analysts estimate that a 25% tariff on Mexico and Canadian car parts could add about $2,100 in cost per U.S.-assembled vehicle, while cars produced in Mexico or Canada could cost $8,000 to $10,000 more.
Imported Liquor and Food
“Some imported liquor prices could also change if tariffs are imposed, particularly if domestic consumers are willing to pay up for their favorite imported brands,” Haefele said.
David Ortega, a food economist and professor at Michigan State University, said, “If tariffs are placed on fresh produce from Mexico, we might see higher prices for staples like tomatoes, avocados, and peppers, since Mexico supplies a large portion of these goods, especially during the off-season in the U.S.”
How to Prepare for Potential Price Hikes
To ride out any potential Trump-inspired price hikes, “try to prioritize saving, even if just a small amount every pay cycle,” said Farnoosh Torabi, a financial expert and author.
“If we think the researchers are correct in their estimates of how the tariffs will impact Americans, I’d say you’ll want to set aside an additional $2,000 at minimum for increased costs. That’s about $170 per month,” she added.
Lupo recommended, “Diversifying where you shop and supporting local producers where possible can help offset some of the burden.”
“Instead of stressing too much about these changes and stockpiling goods, it’s probably smarter to start budgeting more effectively,” Tu said. “Track your spending and identify areas where you can cut back if necessary. Maybe for you that means looking for deals, using coupons, considering buying in bulk to save money on groceries and other essentials, or buying secondhand. You want to try and shop smarter, not harder.”