Trump's tariff plans pose the greatest threat to these products and companies.

• The global supply chain is now at the forefront due to tariff proposals as President-elect Donald Trump gets inaugurated on Monday.
• Trump stated on the campaign trail that he intended to impose tariffs on goods produced in other countries, particularly China.
• The high costs of sneakers, cars, furniture, and other items may force many consumers to alter their purchasing behavior.

The products that U.S. shoppers purchase in retail stores may originate from distant factories or farms, which could compel consumers to alter their purchasing behavior.

The global supply chain of common household items like sneakers, T-shirts, beer, and more, often originates in countries such as China, Mexico, and Canada before reaching big-box retailers, grocers, and malls in the U.S. This intricate global supply chain will be at the forefront on Monday as President-elect Donald Trump is inaugurated and is predicted to impose new tariffs on imports.

The tariffs Trump implemented on metals and other key materials during his first term have become familiar to Americans, but the levies he has threatened for his return to the White House could have a much bigger impact on household budgets.

Experts informed CNBC that most people do not understand the extent of the items that could experience price increases due to duties, including avocados, children's toys, chocolate, and cars. The proposed tariffs on goods from China, Mexico, and Canada, the three largest U.S. trading partners, are likely to have the greatest impact on U.S. consumers.

The specifics of the tariffs, including which countries would be impacted and the potential duty rates, are yet to be determined and may be subject to change. During his campaign, Trump proposed imposing tariffs ranging from 10% to 20% on all countries and up to 60% on Chinese goods.

Despite recent news reports suggesting that Trump may reduce his tariff proposals as a negotiating tactic, the president-elect has denied these claims.

Trump, Biden, and other Democrats have all supported the use of tariffs to boost manufacturing in the U.S., create jobs, and enhance national security.

Retailers face the risk of increased costs if tariffs are imposed, which they may have to absorb, share with producers, or pass on to customers through higher prices. This is the most likely scenario as the industry is hesitant to sacrifice profits, according to retail executives and industry experts. Major retail trade groups, including the National Retail Federation and Consumer Technology Association, have warned that tariffs would effectively be a tax on American businesses and consumers.

Consumers are anticipating that tariffs will negatively impact their wallets. A Morning Consult survey of over 4,400 people in early December found that about 67% of U.S. adults believe it is very likely or somewhat likely that companies will pass on the cost of tariffs to consumers. Despite this, the same poll revealed that about 45% of adults support a 10% tariff on all imports, and more than a third of respondents back a 20% duty on all goods and a 60% levy on Chinese imports.

PwC's Ali Furman, head of the consumer markets industry, stated that tariffs are now the main topic of discussion among companies working with the consulting firm, with conversations reaching the highest levels of management. She added that the impact of tariffs could be different this time around, as Trump's new proposal is broader and comes at a time when retailers are struggling to convince consumers to spend due to inflation.

""Since there's a more cost-conscious consumer, you need to be more thoughtful about passing on costs to them," she stated."

She added, "At the same time, you don't want to appear anti-tariff or anti-American."

The uncertainty surrounding Trump's tariff plans is making it difficult for companies to plan accordingly. Automotive executives who have spoken with CNBC in recent weeks are preparing for multiple scenarios but not taking any action until there is more clarity.

"Antonio Filosa, head of Stellantis' North American operations, stated that they are working on scenarios, but they need to wait for Mr. Trump's decisions. After his administration makes a decision, they will work accordingly."

According to Professor Brett House, an economist from Columbia Business School, all consumer products may experience a price increase due to the proposals, although some companies are more affected than others.

"According to House, 50% of U.S. petroleum imports come from Canada. The Trump administration imposes tariffs on these imports, which will make everything in the U.S. more expensive. The impact of these tariffs could be enormous and affect every single thing produced in the U.S., every household, and every business. No one will be immune."

If duties on goods from China, Canada, and Mexico are implemented, various everyday items will be affected.

China: Sneakers, furniture and toys

In closets, living rooms, and children's playrooms, a variety of American household items come from China.

The Home Furnishings Association, a trade group representing home goods retailers, reports that the country is the largest furniture exporter globally. In 2023, $32.4 billion in furniture was imported into the U.S., with 29% of it coming from China and 26.5% from Vietnam, according to the HFA, citing investment banking firm Mann, Armistead & Epperson as a top source for furniture industry data.

Although between 30% and 40% of furniture is produced in the U.S., up to 50% of raw materials, such as wood, fabrics, hinges, and screws, are imported, making it challenging to keep the prices of home products stable, despite their "Made in America" label.

Shannon Williams, CEO of HFA, stated that home goods retailers would not be able to withstand a 60% tariff on imports from China and would need to relocate their supply chains if Trump's proposed tariffs were implemented. Although tables and couches may not increase by 60%, their prices would still rise, according to Williams.

If companies shifted their supply chains to Vietnam, where many manufacturers relocated during Trump's first term, retailers could still be subject to tariffs of 10% to 20% – in addition to the expenses of relocating and scaling operations. The tariffs alone could increase the cost of a $2,000 couch to $2,200 to $2,400.

If U.S. furniture imports from Mexico accounted for about 10% in 2023, a $2,000 couch could cost up to 25% more at $2,500.

Some industry experts predicted that retailers may absorb some of the cost of tariff increases and pass it on to manufacturers to avoid significant price increases for consumers.

During Trump's first administration, furniture prices rose by approximately 2.3% between 2018 and 2019 due to the 10% tariffs he imposed on certain goods, according to the HFA, who sourced their data from the consumer price index.

The home goods sector is facing additional challenges due to higher tariffs, making it less able to absorb the cost. According to Williams, the industry has been struggling due to Covid-era purchasing, high interest rates, and a sluggish housing market, making the past two years "tough."

Toys could become more expensive if higher tariffs are implemented.

The Toy Association, a trade group representing the industry, states that around 80% of toys imported to the U.S. originate from China. Under Trump's proposals, the cost of toys manufactured outside of the U.S. could potentially rise by up to 56%.

A $20 Barbie doll, traditionally made in China, would now cost $31.20.

"If this were to occur, parents may be forced to purchase cheaper, non-compliant toys from unauthorized online sellers. These toys frequently do not adhere to U.S. safety and quality standards and could be hazardous to children, putting them at risk. The Toy Association stated in an email to CNBC that toys manufactured in the U.S. are compliant with stringent safety and quality standards, and they hope they will remain affordable to American families and not be subject to tariffs."

According to CEO Ynon Kreiz, as of the end of 2023, approximately 50% of toys from Barbie's parent company were made in China. This year, Mattel anticipates less than 40% of its sourcing to come from China, resulting in a 20% exposure in the U.S. to China sourcing, given the company's geographic sales mix, as stated by Chief Financial Officer Anthony DiSilvestro.

"DiSilvestro stated during a Morgan Stanley retail conference in December that we have effectively minimized the potential exposure. However, if we are affected, we anticipate increasing prices to compensate."

In 2023, China was the source of approximately 37% of footwear imports to the US, followed by Vietnam with 30%, Italy with nearly 9%, and Indonesia with 8%, according to data from the U.S. International Trade Commission.

According to the group, over 90% of footwear in the U.S. is imported.

Before Trump's presidency, footwear manufacturers were already shifting some sourcing away from China due to its shrinking labor force, according to Matt Priest, CEO of the organization. However, he stated that returning production to the U.S. is unrealistic, and relocating it to another part of Asia can be challenging.

Some companies have accelerated their plans, including Steve Madden, who said in November that he will reduce the goods he imports from China by as much as 45% over the next year.

U.S. footwear companies are awaiting clearer policy, stated Priest at a press conference on Thursday.

""Inflationary actions must be paid for," he stated."

While China is not a significant cosmetics manufacturer, Estée Lauder, a widely recognized drugstore staple and popular brand among younger shoppers, produces approximately 80% of its makeup in the region.

In an interview with CNBC, CEO Tarang Amin stated that the company may have to increase prices if tariff hikes occur, which could be a risky move given that the company's low prices are a significant draw.

Mexico: Cars, beer and avocados

In recent years, there has been a growing demand among U.S. consumers for avocados and Mexican beers. Additionally, they have become accustomed to purchasing vehicles from major American automakers that have a significant amount of manufacturing in Mexico.

Tariffs on Mexican imports could endanger those habits, particularly for price-sensitive shoppers.

While many major automakers have factories in the U.S., they still heavily rely on imports from other countries, such as Mexico, to meet American consumer demand.

As a result of the North American Free Trade Agreement and the United States-Mexico-Canada Agreement, automakers increasingly turned to Mexico as a more cost-effective location for vehicle production compared to the U.S. or Canada.

In 2024, the top six-selling automakers in the U.S. all had at least one plant in Mexico, accounting for over 70% of U.S. sales.

The U.S. and Mexico have a highly interconnected auto industry, with Mexico importing 49.4% of all auto parts from the U.S. and exporting 86.9% of its auto parts production to the U.S., as per the International Trade Administration.

The impact of 5%, 10%, and 25% tariffs on Mexico and Canada imports would put most of the adjusted earnings of Wells Fargo, Bank of America, and JPMorgan Chase at risk, according to the firm's estimates. The firm estimates that the impact of these tariffs would be $13 billion, $25 billion, and $56 billion, respectively, across the three companies.

In Mexico, both GM and Stellantis have large factories that manufacture profitable full-size pickup trucks. Additionally, they, like Ford and others, have constructed electric vehicles in the country to reduce expenses.

The U.S.'s top-selling beer is also found in Mexico, with Modelo taking over the crown from Bud Light in 2023. Additionally, Corona, owned by Constellation, ranks among the top 10 U.S. beer brands, alongside fast-growing Pacifico.

The company's sales in the first three quarters of its fiscal year were driven by its imported beer brands, which accounted for 85% of its revenue.

If Trump imposes tariffs, Constellation's cost of goods sold would increase by approximately 16%, according to estimates from Wells Fargo Securities.

Due to a 2013 antitrust settlement, it appears that the company will opt to increase prices rather than relocate production. In recent years, Constellation has invested heavily in expanding its Mexican production capabilities.

During the company's recent earnings call, Bill Newlands, CEO of Constellation, stated that it is premature to speculate on how tariffs will unfold.

He informed analysts on Jan. 10 that they had considered numerous permutations and would adjust their approach as needed based on what unfolds.

Since Trump declared his intention to rekindle a trade war with Mexico, uncertainty about tariffs has caused Wall Street analysts to lower their ratings for Constellation's stock.

Avocados have proven less easy to substitute than beers.

Mexican food and healthy fat diets have made avocado a common sight in U.S. grocery stores.

Over the course of one year, from June 2023 to June 2024, the United States imported more than 2.4 billion pounds of Mexican Hass avocados.

The majority of avocados consumed in the U.S. are grown in Mexico, despite the fact that they are also grown in California, Florida, and Hawaii.

Avocado toast and guacamole can be enjoyed year-round due to the country's ability to produce the fruit consistently.

Avocado consumers have consistently demonstrated their willingness to pay higher prices for the fruit, despite a significant increase in demand over the past decade.

Avocados from Mexico CEO Alvaro Luque stated that while prices may increase during certain times of the year, this is a normal occurrence and does not significantly impact consumption.

Despite charging a premium for guacamole, the burrito chain has experienced traffic growth quarter after quarter, with customers largely accepting price increases across its menu over the last few years.

Some companies, aside from avocados and cars, also produce clothing in Mexico. For instance, Levi's has started manufacturing some of its Wrangler jeans in the region. Although its denim currently costs around $60 at Macy's, this could increase to as much as $75 with tariffs factored in.

Canada: Cars, coats and French fries

Consumers may face higher prices for French fries and winter coats due to tariffs on Canadian goods, which would negatively impact automakers and car buyers.

In 2022, Canada's top export was crude petroleum, with $27 billion in car exports coming in second, according to the Observatory of Economic Complexity.

The proposed tariffs on Canadian vehicles would have the most significant impact on Detroit automakers, but there would be industry-wide consequences if changes to parts from suppliers such as Canada-based Magna occur. Ontario Premier Doug Ford and other politicians and industry officials have characterized Trump's tariff proposal as an existential threat to the country's recovering automotive industry.

Last year, in the province, 1.54 million light-duty vehicles were produced by five automakers, mainly for U.S. consumers, including Ford, GM, Stellantis, Toyota Motor, and Honda Motor.

On Wednesday, Gov. Gretchen Whitmer of Michigan cautioned that 25% tariffs on imports from Mexico and Canada could harm the U.S. auto industry, raise vehicle prices, and benefit China.

"Consider this: 70% of the auto parts produced in Michigan are sent directly to our neighbors. The only beneficiary in this scenario is China. They would be thrilled to see us harm our own auto industry unnecessarily. This is a matter of national security. We must prevent this from happening," she stated during a speech at the Detroit Auto Show.

The pressure from Canadian tariffs is not limited to the auto industry.

Annually, Canada exports about $40.5 billion in agricultural goods to the U.S., including $1.7 billion in frozen French fries and other frozen potato products, as per Agriculture and Agri-Food Canada.

McCain Foods, a Canadian family-owned company, is the largest producer of frozen French fries globally, accounting for one out of every four fries consumed worldwide. The company has seven factories in Canada and 11 in the U.S, as stated on its subsidiaries' websites.

It is unlikely that consumers, who have become more price-sensitive in the past year, would accept a price increase to cover the tariff in grocery stores and fast-food drive-thru lanes.

If Trump imposes steeper tariffs on Canadian goods, McCain may shift even more of its production to the U.S. Suppliers could switch to a U.S. competitor like . Fortunately, many French fry suppliers, including Idaho-based Lamb Weston, have increased their capacity since the Covid pandemic.

Tariffs on Canadian goods could also affect apparel.

The retailer has established its reputation through high-end outerwear for cold weather, with about 70% of its merchandise made in Canada and 30% made in Europe at a factory owned by the company in Romania and contractors in other parts of the continent.

A spokesperson for the company refused to disclose how Canada Goose is handling tariffs and whether it plans to raise prices.