Majority of US companies say they have to raise prices due to Trump tariffs

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"Majority of US Companies Anticipate Price Increases Due to Ongoing Tariffs"

Majority of US companies say they have to raise prices due to Trump tariffs analysis cover image The Guardian 8.4
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Original Article Source: https://www.theguardian.com/us-news/2025/may/20/trump-tariffs-prices-allianz-report
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TruthLens AI Summary

A recent report by Allianz indicates that a significant majority of US companies, specifically 54%, are preparing to raise their prices in response to the tariffs implemented during Donald Trump’s administration. The survey, which included responses from 4,500 companies across nine countries including the US, UK, and China, revealed that only 22% of these businesses felt they could absorb the additional costs imposed by the tariffs. This situation has been exacerbated by the unpredictability of US trade policy, which has diminished confidence among exporters. The report highlights that 42% of exporting companies now anticipate a decline in turnover ranging from -2% to -10% over the next year, a stark contrast to the nearly negligible expectations of less than 5% prior to the announcement of the tariffs on April 2, referred to as “liberation day” by Trump.

Despite some rollback of proposed levies, many key tariffs remain in effect, including a 10% universal tariff on all US imports and a 30% tariff specifically on Chinese imports. Trump has claimed that such tariffs would ultimately make America wealthier, but the expectation among American companies and consumers is that they will face higher prices as these tariffs take hold. In April, consumer inflation expectations reached their highest level in over four decades. Companies have been attempting to mitigate immediate price hikes by stockpiling goods, with nearly 80% of American firms reportedly frontloading shipments to China before tariffs were formally announced. However, as tariffs persist, many companies, including Walmart and Mattel, have indicated that they will have to increase prices to cope with the higher costs, with a majority (60%) of surveyed companies anticipating negative impacts on their businesses. Economists suggest that while companies are currently relying on existing inventory to delay price increases, many will likely have to pass on these tariff-related costs to consumers by summer if the trade conflict continues.

TruthLens AI Analysis

The analysis of the article reveals several layers of implications regarding the economic landscape in the United States and the effects of Donald Trump's tariffs on American businesses. The report highlights a prevailing sentiment among companies that price increases are inevitable due to these tariffs, which can have far-reaching consequences for consumers and the economy.

Economic Impact on Businesses

A significant majority of surveyed companies, 54%, indicated that they must raise prices to offset tariff-related costs. This suggests that the tariffs are already being felt within the supply chain, leading to a potential ripple effect on consumer prices. The reluctance of only 22% of companies to absorb these costs demonstrates a widespread expectation of higher prices, which could influence inflation rates in the near future.

Consumer Sentiment and Inflation

The article notes that consumer expectations of inflation have reached levels not seen since 1981. This could result in decreased consumer spending, as individuals may hold back on purchases in anticipation of rising prices. The economic climate, marked by uncertain trade policies and inflation concerns, could lead to a more cautious consumer base.

Confidence of Exporters

The decline in confidence among exporting companies, with 42% anticipating a fall in turnover, indicates a worrying trend for the US economy. This drop in confidence can hinder growth and innovation, as companies may scale back investments and expansion plans due to an uncertain trade environment.

Stockpiling as a Strategy

In response to the tariffs, many companies have opted to stockpile goods. This strategy temporarily masks the immediate price increases but could lead to larger issues down the line if tariffs are maintained or increased. The practice of frontloading shipments suggests that businesses are trying to navigate a volatile environment, which might provide short-term relief but does not address the underlying problem of increased costs.

Political and Market Implications

The article implies that the political landscape, particularly with the upcoming elections, may influence business strategies. Companies are aware of potential changes in trade policy and tariffs depending on electoral outcomes, creating a sense of urgency in their operational decisions. The potential of price hikes can also impact stock markets, particularly for sectors reliant on imports like manufacturing and retail.

Public Perception and Trust

The narrative surrounding Trump’s tariffs may be perceived as manipulative, as the administration promotes tariffs as a means to make America wealthier. However, the reality presented in the article suggests that these tariffs primarily serve to increase costs for consumers and businesses, leading to skepticism about the administration's claims. This discrepancy between public statements and economic realities could erode trust in economic leadership.

The article ultimately presents a complex picture of the situation, indicating that while tariffs are positioned as beneficial, their actual impact may be detrimental to both businesses and consumers. The report raises questions about the true effectiveness of these policies and their long-term sustainability in fostering economic growth.

Unanalyzed Article Content

Source URL: https://www.theguardian.com/us-news/2025/may/20/trump-tariffs-prices-allianz-report

A majority of US companies say they will have to raise their prices to accommodate Donald Trump’s tariffs in the US, according to a new report.

More than half (54%) of the US companies surveyed by insurance company Allianz said they will have to raise prices to accommodate the cost of the tariffs. Of the 4,500 companies across nine countries, including the US, UK and China, surveyed by Allianz only 22% said they can absorb the increased costs.

The unpredictability of US trade policy has also dented exporters’ confidence. The survey found 42% of exporting companies now anticipate turnover to decline between -2% and -10% over the next 12 months, compared to fewer than 5% before 2 April “liberation day” – when Trump unveiled his tariff policy.

Though Trump haspulled backon many of the levies he initially proposed, key tariffs remain in place, including a 10% universal tariff on all US imports, a 30% tariff on Chinese imports and extra tariffs on specific industries like metal and auto parts.

Trump has insisted that tariffs will make America “very wealthy again”, though it appears that American companies and consumers are simply expecting to pay higher prices as the tariffs settle into place. In April, consumerexpectationsof inflation reached their highest point since 1981, according to the University of Michigan’s Institute for Social Research.

Instead of immediately raising prices, which could deter customers, many companies have spent months trying to get ahead of Trump’s tariffs by stockpiling goods to temporarily circumvent them.

Nearly eight out of 10 American companies said that they frontloaded shipments to China before Trump announced his tariffs, with 25% saying they had started to front-load before the November 2024 election.

Inflation data from April showed that US price increases remained roughly level for the month. Economists say that it will take a while for tariff-related price increases to show up in data and companies have started to say they will pass some of the cost of tariffs onto consumers.

“Given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure,” Doug McMillion, Walmart’s CEO,saidin an earnings call last week. “The higher tariffs will result in higher prices.”

Toymaker Mattel also said that it would have to raise prices and that it would continue to manufacture its products outside of the US, “where [it] can be more efficient and more productive”, the company’s CEO, Ynon Kreiz,toldCNBC earlier this month.

The majority of companies (60%) in the report said they expect the tariffs to have a negative impact on their business, with less than half saying they expect positive export growth this year, down from 80% who had said the same at the beginning of the year.

While many companies are holding out on price increases, relying on stockpiled inventory and hoping trade deals will be reached soon, companies will have to raise prices in the summer if a trade war continues.

“Monthly business surveys … do indicate that companies will eventually pass on most of the tariff increases by the summer,” said Maxine Darmet, senior economist at Allianz Trade.

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Source: The Guardian