People buy on February 20, 2025 in a supermarket in the Manhattan district in New York City.
Charly Triballeau | AFP | Getty pictures
According to Ey-Partenon Chief Economist Gregory Daco, consumers are certainly higher sticker prices because companies are preparing to pass on increasing costs of tariffs.
In an EY survey of 4,000 managers, almost half said that they were ready to pass on two thirds of the additional costs of tariffs to their customers. More than 3 out of 10 participants were ready to go one step further and to pass on over 90% of the additional costs to buyers, according to the survey.
The observations of the managers will come into force on Tuesday as 25% tariffs by President Donald Trump in Canada and Mexico, together with an additional 10% appearance on imports from China.
Goal CEO Brian Cornell recently said that the tariffs for Mexican goods will probably lead to higher prices for products.
The pace of the current trade war under the second Trump government was surprising and “much faster than previously seen,” Daco told CNBC.
The project tariffs of the economist of the economist will have a “remarkable shock” to reduce gross domestic product in the USA by 0.6%, with 20% of the tasks for China and an average of 3% tariffs being accepted for the rest of the world.
“However, our first basis was actually that tariffs would be implemented later,” said Daco.
Even if the tariffs of the Trump government only last in the short term and can be lifted quickly, uncertainty will continue to undermine the trust of the company – and prices cannot move at the same pace.
“Today it doesn't matter whether the tariffs will come tomorrow or in a week – they are preparing [and] The attempt to build resilience through methods such as increasing inventories and appearance on various supply chains and alternatives said.
“But this has costs and is in and in itself inflationary. Uncertainty protects economic activity,” he added.
Specific, targeted tariffs “are extremely painful at the sector level”, but their effects need more time to carry out consumers, said Daca. Car, construction and steel manufacturers probably have a stock before increasing the costs for consumers, he added.
“So consumers will not necessarily see the full effect overnight – but very quickly they will increase the car prices – build a fridge, a house and other things that are going on,” said Daco.
Even if the tariffs are raised quickly, it predicts higher price levels.
“It is true that tariffs could be withdrawn … that doesn't mean that there is no negative,” said Daco.
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