CEOs across industries are warning that prices on everyday items from candy bars to cars will soon climb higher as companies pass on tariff-related costs to consumers. These price hikes threaten to slow consumer spending and fuel inflation, creating political challenges for President Trump despite his recent claims that “gas and grocery prices are WAY DOWN.”
Companies Announce Price Hikes
“Tariffs are inherently inflationary,” Procter & Gamble (PG) CEO Jon Moeller told CNBC as the consumer goods giant estimated that current and proposed tariffs could add between $1 billion and $1.5 billion to its annual costs. P&G plans to counter these expenses by raising prices on its products.
They’re not alone. Unilever (UL) and Nestle (NSRGY) have already started hiking prices to address rising commodity costs, with both companies signaling more increases if tariffs push expenses even higher.
Some companies are taking more subtle approaches. PepsiCo (PEP) is offering smaller versions of popular items at similar price points, effectively increasing the per-unit cost for consumers. Meanwhile, automakers, including Ford (F), are preparing price hikes on vehicles rolling off assembly lines next month if Trump doesn’t deliver on hinted tariff relief.
Tariff Impact on Product Categories
The impact of tariffs varies significantly across product categories. Clothing, shoes, and textiles are seeing some of the steepest increases, with prices rising 10-20% and apparel costs expected to climb up to 17% overall. Due to tariffs, food prices are up about 2.8%, with fresh produce increasing 2.2%. Electronics face variable price hikes, while new cars could see a $4,000-$10,000 increase depending on their origin.
Not all companies are rushing to pass costs along. Tractor Supply Co. (TSCO) executives said they’re holding off on consumer price increases despite vendor hikes. “There’s too much uncertainty,” explained CEO Hal Lawton. “Once there’s greater certainty, then we look forward to having very productive conversations with our vendor partners.”
Economic Impact
The economic outlook is concerning. According to University of Michigan data, consumers’ inflation expectations have soared to multi-decade highs. The average American household could face approximately $3,800 in annual purchasing power loss due to tariffs and retaliatory measures from other countries, with lower-income families feeling the most strain.
Federal Reserve officials are watching closely. While Fed Governor Christopher Waller believes the inflation impact will be temporary, many of his colleagues are more concerned about persistent price pressures.
With U.S. retail sales rising in March—partly due to consumers rushing purchases ahead of tariff implementation—economists now expect Americans to pull back as prices climb and job markets weaken, amplifying recession fears and creating continued uncertainty for both businesses and shoppers in the months ahead.
