Donald Trump promises big tariffs. Companies are willing to raise prices

If former President Donald Trump wins the presidential election next week and returns to the White House, he is poised to massively increase tariffs on foreign imports. American companies are preparing their response: raising prices for consumers.

Trump has promised to impose blanket tariffs of between 10% and 20% on all imports, along with a 60% tariff on Chinese goods. He also threatened a “100% rate‘ on countries ‘abandoning’ the US dollar and tariffs as high as 2,000% on foreign-made vehicles.

Although Trump has repeatedly touted his love for tariffs — “The nicest word in the dictionary is tariffs,” he said recently — companies aren’t nearly as ecstatic.

“If tariffs of 10% to 60% are introduced across all of our trading partners, it will clearly cause some degree of disruption,” says Compass Diversified Holdings (CODI) CEO Elias Sabo said during a recent earnings call. “You know, there’s no way any company can absorb these kinds of rate increases.”

In the past, Trump has argued that tariffs are protectionist measures designed to target foreign companies and encourage domestic manufacturing.

“We’re going to bring the businesses back,” Trump said recently. “We are going to lower taxes even further for companies that are going to make their product in the US, we are going to protect those companies with strong tariffs.”

However, a Study from 2018 Examination of the short-term effects of Trump’s 2018 tariffs found that the small boost to protected businesses was offset by higher input costs and retaliation. Those tariffs also led to higher prices.

“We are obviously very concerned” about higher tariffs on shoes and apparel, Columbia Sportswear (COLM) CEO Timothy Boyle said during an earnings call. “We believe the argument about tariffs improving domestic production of items such as shoes and clothing is misleading.”

Companies that produce everything from auto parts and clothing to baby products and shoes expect to raise their prices if higher tariffs are imposed. That would especially impact lower-income Americans, who spend a larger percentage of their income on goods like food and clothing.

“It’s going to be very, very difficult to keep products affordable for Americans,” Boyle later said told The Washington Post.

And other executives agree.

“If we get tariffs, we will refund those tariff costs to the consumer,” says Autozone (AZO) CEO Philip Daniele said during a phone call last month. “We will probably have to take some surgical price action,” says Stanley Black & Decker (SWK) CFO Patrick Hallinan said during a call in May.

Even companies that expect to be largely unaffected by the excise tax increases are concerned. During a recent earnings call, Sleep Number (SNBRCEO Shelly Ibach pointed to the long-term shortage of semiconductor chips, which has put pressure on companies across industries.

During his administration, Trump has imposed nearly $80 billion in new taxes through tariffs on products worth about $380 billion in 2018 and 2019. according to the Tax Authorities. President Joe Biden’s administration kept most of those tariffs in place and added hikes on $18 billion worth of Chinese goods — such as semiconductors and electric vehicles — for a $3.6 billion tax hike.

Together, these tariffs have reduced employment by about 142,000 full-time jobs and lowered gross domestic product by 0.2%, the foundation said. Trump’s proposed tariffs would raise taxes by another $524 billion a year, shrink GDP by 0.8% and reduce employment by about 684,000 jobs. Notably, this estimate does not take into account the possibility of a global trade war.

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