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Tariff Costs not Yet Fully Reflected in Consumer Prices
Executives are cautiously approaching price increases related to tariffs, hesitant to move before competitors, according to recent reports. While costs are rising,companies are largely absorbing the impact or employing strategies to mitigate it,rather then immediately passing it on to consumers.
Several major companies have even reported price decreases. walmart and Estée Lauder (EL) have lowered some prices, while La-Z-Boy Inc. (LZB) increased promotional discounts.
Amer Sports Inc. (AS), the Finland-based athletic equipment manufacturer, has raised prices approximately 10% on its Wilson brand – known for tennis equipment – but has not yet factored tariffs into the pricing of its Salomon or Arc’teryx brands, according to CFO Andrew Page.
Walmart CEO Doug McMillon noted that customer behavior hasn’t significantly changed in response to the tariffs,stating,”The impact of tariffs has been gradual enough that any behavioral adjustments by the customer have been somewhat muted.” however, McMillon also indicated that the retailer’s costs are increasing weekly as it restocks inventory at “post-tariff prices.”
Domestic Production Offers Potential Advantages Amidst Tariffs
Despite the overall challenges,tariffs may present opportunities for companies with substantial domestic manufacturing operations.
La-Z-Boy CEO Melinda Whittington highlighted that the “vast majority” of the company’s manufacturing takes place in North America, perhaps shielding its furniture from import taxes and making it a more attractive option for retailers.
Coty acknowledged tariffs as a “major headwind” but announced a strategic shift to reshore fragrance production destined for the U.S. market. CEO Sue Nabi stated this move will provide Coty with a “relative cost advantage versus our peers, who all produce in europe.”
