What are America's top retailers talking about? Tariffs, and what they mean for them and for consumers.

That's the topic everyone was buzzing about at a Washington, D.C., event with major U.S. retailers in early December. President-elect Donald Trump's proposed tariffs on China, Canada and Mexico had, at that point, been well established.

"We exclusively talked about this topic of tariffs," Balika Sonthalia, a partner and practice leader of strategic operations, Americas, at global strategy and management consultancy firm Kearney, told USA TODAY.

In addition to immigration policies, tariffs have retailers worried that “the combination of the two can put a lot of sectors in between a rock and a hard place,” she said. And with Trump repeatedly vowing tariffs are coming – and doubling down this week after the Washington Post reported he might scale them back – U.S. retailers and consumers aren’t waiting to prepare.

Retailers are trying to learn “what exactly they are walking into,” said Sonthalia, whose specialty for Kearney is consumer products and retail and distribution clients. 

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'Another form of inflation, just spelled differently'

The proposed tariffs could cost consumers an additional $2,500 to $7,600 a year per household, according to estimates, said Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation.  

Consumers ultimately will pay for any tariffs that are put in place, said Darpan Seth, CEO of Nextuple, which helps build and support programs to help its clients get products for consumers in stores or online. The firm's client list includes major U.S. retailers like Dick's Sporting Goods and luxury brands such as Kate Spade and Coach.

“For consumers, tariffs are like another form of inflation, just spelled differently,” Seth said. “They have the same effect of rising prices.” 

Some consumers are going to delay major purchases or make smaller repairs if prices go up for imported goods from certain countries, he said. For example, a consumer “may want to do a quick fix instead of trying to change the carburetor in your car,” Seth said. 

Retailers dealing with tariffs will have no choice in the short term but to increase prices, Seth said. 

US retailers are worried about tariffs

Gold and other industry sources say even though the Trump administration threatened tariffs on imports during president-elect's first administration – and followed through on some – things are different this time.  

There’s a lot of concern among retailers represented by the National Retail Federation, which includes both large and small businesses, Gold said. 

“There’s so much complexity in the supply chain and so many challenges in the supply chain as it is, to have something as big as these massive tariffs, is really causing disruption in itself and folks trying to figure out ‘What am I supposed to do?'" Gold said.

Since there are several different scenarios of tariffs being discussed, retailers are trying to come up with plans to address them all, he said.

There are threats of a universal baseline tariff of 10% to 20% on everyone and everything, Gold said. There is also a China-specific tariff, which is 60% to 100%, he said. There are also new threats to 25% tariff on Canada and Mexico and 10% on China over immigration and fentanyl, Gold said.

How will tariffs impact consumers?  

A study from the retail federation looked at the estimated impacts of the tariffs on six consumer product categories: apparel, toys, furniture, household appliances, footwear and travel goods. 

Retailers rely heavily on imported products and manufacturing components to offer customers a variety of products, Gold said.  A tariff is a tax paid by the U.S. importer, not by a foreign country or the exporter, he added.

The retail federation said while some U.S. manufacturers could benefit from the tariffs, the gains to U.S. producers and the Treasury from tariff revenue do not outweigh overall losses to consumers. 

According to the retail federation, some examples of potential price increases with tariffs include: 

◾ A $40 toaster oven would cost consumers $48 to $52.

◾ A $50 pair of athletic shoes would cost $59 to $64.  

◾ A $2,000 mattress and box spring set would end up costing $2,128 to $2,190.  

Higher prices and loss of spending power would hit low-income families especially hard, the retail federation said in its study, released on Nov. 4. 

Gold said while the retail federation looked at six specific categories, he also believes pricing for consumer electronics, pet products, children’s products and groceries, could be hit hard by the proposed tariffs. 

Still, there's some optimism. Financial advisors previously told USA TODAY Trump's tariffs during his first term didn't cause "significantly high inflation." And the president-elect's administration remains steadfast on the benefits of tariffs.

“President Trump has promised tariff policies that protect working Americans from the unfair practices of foreign companies and foreign markets," said Brian Hughes, Trump-Vance transition spokesman. "As he did in his first term, he will implement economic and trade policies to make life affordable and more prosperous for our nation, while simultaneously leveling the playing field for American manufacturers.”

How are US retailers reacting and preparing for tariffs? 

Some retailers are looking at sourcing differently while others are putting in contingency plans, said Neil Saunders, a retail analyst at the research and analytics firm GlobalData. 

The retail federation’s retail members are trying to prepare for the best – and worst-case − scenarios, Gold said. 

Larger U.S. retailers have more ability to “mitigate and shift their sourcing,” Gold said. He added those shifts can't happen overnight. Smaller mom-and-pop stores and medium-sized retailers don’t have as much flexibility, he said. There's even worry the tariffs might cause some smaller retailers to go out of business, Gold said.

There have already been signs that consumers and retailers reacted to potential price increases and tariffs. According to the Wall Street Journal, some retailers during Black Friday ran advertisements for things like electronics, washing machines and refrigerators before prices increase due to tariffs. Seth said sales figures from Black Friday and Cyber Monday have shown that purchases in those categories went up. 

Price increases are coming for consumers

Larger retailers also warned consumers will pay higher prices with tariffs, Gold said. Price increases for consumers will be dependent on how quickly tariffs go into effect.

A spokesperson for Walmart declined to comment, but in an interview with CNBC in early November before the election, Walmart Chief Financial Officer John David Rainey said the retailer may have to raise prices on some items if Trump’s proposed tariffs take effect. 

“Our model is everyday low prices," he said in the interview. "But there probably will be cases where prices will go up for consumers.” 

Dollar Tree executives, in a December earnings call, said the price of the store’s products may increase again because of tariffs. The discount retailer also said, as previously reported in USA TODAY, that proposed tariffs could also change what products consumers could find at Dollar Tree. 

The media relations department for Gap, which also includes Old Navy, Banana Republic and Athleta, did not respond to a request for comment.

Sonthalia said retailers at the Washington meeting she attended said they could absorb costs by implementing some cost-efficiency and pricing strategies if tariffs were up to 10%.  Otherwise, costs would be passed to consumers, she said.

Gold said even if the tariffs don't go into effect, "just the threat alone is causing a little bit of chaos within the supply chain." There's also the threat of another port strike this month, he said. 

Saunders said some retailers think the tariffs might be just a Trump negotiating tool.

Sonthalia, whose clients include Fortune 15 companies and small and independent retailers across all sectors, including food, pharmacy, electronics and apparel, believes "the tariffs are definitely coming."

“It’s a question of to what degree,” she said.   

Consumers don't want to pay prices for goods made in the USA

Consumers are price-conscious and don't want to pay what it would cost to manufacture many of the items they want in the U.S., said Lauren Beitelspacher, a professor in the marketing division of Babson College in Wellesley, Massachusetts.

Manufacturing for many goods in the United States is expensive because costs are high for labor, production and building facilities, said Beitelspacher, who studies the retail industry. Moving manufacturing to the U.S. would cause prices to "skyrocket," she said.

"Consumers have a reference price of what they’re willing to pay for something and if it goes over that reference price, then they really question if they need it, especially if it’s something that’s a nonessential good,” Beitelspacher said. 

The U.S. also does not have some of the raw materials for some products like silks, which may be sourced overseas, so those import costs would be expensive, she said.

Beitelspacher said she thinks there is a strong possibility large U.S. retailers – as well as major lobbying groups for industries such as food, apparel, retail and electronics  – will push back on the Trump administration's plans.

Companies can't make changes to manufacturing quickly  

Besides, many retailers make business decisions six to 12 months in advance, Gold said. They can't afford to wait until Trump takes office to make a choice.

Tariffs and you:What products will cost more, when prices will rise, and what to buy now

Still, retailers and suppliers learned through Trump's previous administration they needed to be more nimble in their supply chains, said Gold. Relying solely on China wasn't an option, he said. Tariffs could be "a useful part of the toolbox when talking about trade policy," Gold said. But it can't be the only tool, he added.

Overall, the situation is complicated, Gold said.  

Plus, “It’s not easy to move your supply chain. It takes months, if not years to be able to do that,” Gold said. 

Major U.S. apparel and footwear retailers that Beitelspacher spoke to said they are looking into other manufacturing facilities in countries like Indonesia that may not be hit with the tariffs for exports.  

Moves to other countries could affect product quality and more  

The quality of consumer goods could also be impacted as businesses look to other countries – which might have different labor, safety and quality standards – for their manufacturing needs, Beitelspacher said. 

That said, the new business due to Trump's tariffs could be an opportunity for economic growth for some developing nations, said Beitelspacher. 

But, there is also a possibility that some overbooked manufacturing facilities in some countries may outsource some excess production – without the knowledge of the retailer – to what Beitelspacher called "unauthorized facilities." Those facilities may have no oversight or labor policies, which might allow for longer working hours, fewer environmental protections, lower wages and less safe working conditions for employees, she said.

Then, Beitelspacher said, “we’re going to have not only an environmental issue but then potentially a major human rights issue as well.” 

Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook, or Instagram @blinfisher. Sign up for our free The Daily Money newsletter, which will include consumer news on Fridays, here.