Consumers may face higher prices and reduced spending due to Trump's proposed tariffs.

• President-elect Trump's proposed tariff policy could result in increased prices for consumers, according to warnings from retail analysts and trade groups.
• Due to their exposure to China, companies such as Five Below, Crocs, Skechers, Amer Sports, and American Eagle Outfitters may be required to increase prices or reduce profits.
• According to the National Retail Federation's CEO, the implementation of comprehensive tariffs on consumer goods and non-strategic imports is equivalent to a tax on American households.

Analysts said Wednesday that President-elect Donald Trump's tariffs proposal introduces fresh uncertainty around how prices could change during his presidency, potentially causing relief from inflation for retailers and consumers.

During his campaign, Trump stated that he would impose a 10% to 20% tariff on all imports, including tariffs as high as 60% to 100% for goods from China.

The move could result in higher prices for various items including sneakers and party supplies, as warned by companies, retail trade groups, and industry analysts.

"The implementation of comprehensive tariffs on consumer goods and non-strategic imports is equivalent to a tax on American households, according to National Retail Federation CEO Matthew Shay in a statement on Wednesday. This will lead to inflation, higher prices, and job losses."

The NRF stated that Trump's proposed tariff increases would result in "dramatic" double-digit-percentage price spikes in nearly all six retail categories examined by the trade group, including apparel, footwear, furniture, household appliances, travel goods, and toys.

The analysis found that the cost of clothing could increase by between 12.5% and 20.6%.

GlobalData managing director Neil Saunders stated in a research note on Wednesday that tariff hikes would cause retailers a significant problem, which they would likely pass on to consumers. This is likely to result in softer spending from price-conscious shoppers.

According to Saunders, despite Trump's claims, tariffs are paid by companies or entities importing goods, not by countries themselves. This means that the cost of buying products from overseas, whether directly or as an input for manufacturing, would increase significantly.

If a strict tariff policy is implemented between Chinese manufacturers and US retailers, retailers will either suffer a significant loss in profits or be forced to increase prices, which will lead to inflation and negatively impact retail volume growth, as stated by him.

In the short term, the change in tariff policy would be "incredibly disruptive" for supply chains, but they would eventually adjust over time, according to Saunders.

He stated that the hope is that the tough talk on tariffs is a negotiating tactic and that the final implementation will have a limited scope.

Companies most exposed to tariff hikes

The impact of proposed tariff increases on retailers will depend on the origin of their goods and their ability to increase profit margins or prices through popularity and pricing power.

Lorraine Hutchinson, a retail analyst, stated that Five Below's stock was downgraded from neutral to underperform due to the company's inability to offset the impact of tariffs on its goods sourced from China.

Hutchinson stated that companies that source about 85% of their products from North America, like —, would be less vulnerable.

Retailers could benefit from Trump-backed corporate tax cuts, but high tariffs would offset those tax savings.

Peter Keith, a senior research analyst at Piper Sandler, stated that deep discounters, such as those that sell discretionary items like toys and party hats, are exposed because their fixed-price-point business model makes it difficult to pass on higher prices to customers. The store, which imports many of its items from China, has set prices of $1.25. This means the company needs to either absorb higher costs or shake up its price point model altogether, he said.

While Bank of America downgraded from buy to neutral due to its high exposure to China, its strong fan base and higher profit margin may enable it to withstand cost increases or price hikes.

Piper Sandler's Keith pointed out that Yeti's 20-ounce tumblers are priced at $35, but the company has a 60% profit margin on the item.

Yeti and other companies have already been working to diversify their supply chains and move manufacturing outside of China so they're less reliant on the region and its risks. By the end of 2025, Yeti has pledged to move about half of its production to regions outside of China.

More sticker shock?

The implementation of tariffs could result in increased sticker shock for consumers on various purchases, such as car repairs and toys, as inflation decreases. Some companies, including , have informed investors that they will increase their prices to cover the additional costs.

Philip Daniele, CEO of AutoZone, stated on an earnings call in late September that if tariffs are imposed, the company will pass on those costs to consumers by increasing prices.

Thanks to tariffs, customers have the option to pay more for a six-pack of beer, a bottle of Scotch, or a pack of Oreos.

TD Cowen's equity research analysts highlighted several companies with potential risks, including Corona Extra and Modelo Especial maker Heineken, tequila importer Diageo, and snack manufacturer Mondelez International, which produces some of its products in Mexico.

Price increases could hit the makeup aisle, too.

E.l.f. Beauty, a makeup and skincare company that sources many of its products from China, has a plan in place to manage extra costs if the hikes are ultimately enacted.

"Since 2019, our China goods have faced 25% tariffs, which CEO Tarang Amin discussed during a September interview with CNBC's Jim Cramer on "Mad Money." To mitigate these tariffs, we employed a combination of price increases, FX, and supplier concessions. We will use the same strategy this time, with the only significant difference being our continued diversification of supply chains."

Amin stated that the company's production in China has decreased from 100% to 80% over the past five years and he anticipates it to decrease further.

If Trump's proposed tariffs are implemented, shoes for both adults and kids will become more expensive, according to Matt Priest, CEO of Footwear Distributors and Retailers of America, a trade group that represents many shoe brands.

The majority of footwear sold in the U.S. is manufactured abroad, and it would be challenging to relocate a significant portion of that production to the States, even with an added cost, according to him.

He expressed doubt that there is a feasible way to determine how to produce two and a half billion pairs of shoes annually in the U.S.

"He stated that the rate of inflation is decreasing. However, it would be counterproductive to increase inflation again by imposing additional tariffs at a time when consumers are expressing their opposition to higher prices, both politically and personally."