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Sep 21, 2018

What Consumers Think About Tariffs ― And Why You Should Care

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Tariffs on products from China. Steel tariffs. Retaliatory tariffs. The impact of tariffs on prices. It’s a hot-button issue that won’t go away any time soon.

At this point, you’ve probably watched talking heads share their opinions on tariffs, whether those opinions are politically or financially motivated. However, many retailers and brands are glossing over the viewpoints of a critically important group of people – their customers. What exactly do Americans think of tariffs? What product categories are most likely to be affected? How might tariffs impact shopping behavior? What factors are driving purchase decisions? Who will American consumers blame for higher prices?

InfoScout surveyed nearly 1,500 shoppers to get answers to these and other questions about new and impending tariffs. The responses we’ve received offer valuable insights that retailers and brands should take into consideration, especially with the holiday shopping season fast approaching.

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“Tariffs? What Tariffs?”

Nearly one-third (31%) of survey respondents were “not very aware” of tariffs, and didn’t know how tariffs would affect them. We disqualified these respondents from the rest of the survey.

However, that doesn’t mean these shoppers are irrelevant. When prices suddenly and unexpectedly increase, they’ll probably experience sticker shock – and blame the retailer and/or brand. They might chalk up higher prices to inflation, but they won’t make the connection with tariffs. If prices do go up, CPG companies should be on the lookout for brand switching and lapsed buyers.

For the remaining 69% of Americans who are at least slightly aware of tariffs, there’s nearly an even split on whether tariffs are a good thing (54%) or a bad thing (46%) for America.

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“Yes! We Need Tariffs!”

Not surprisingly, politics have a lot to do with the support, or lack of support, for tariffs. The pro-tariff crowd is primarily Republican or choose not to provide their political affiliation.

Among tariff supporters, 79% either somewhat or strongly agree that tariffs will help American manufacturers. 85% don’t think tariffs will have much of an effect on prices, and more than three-quarters don’t expect to change their shopping habits because of tariffs. Specifically, when it comes to CPG products, survey respondents believe imported foods and fresh foods such as produce, dairy and meat will be affected.

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Although tariff supporters aren’t concerned about prices, 86% of respondents will gravitate towards American products and look for “Made in the USA” stickers, tags and stamps. Some will research online and look for information about the manufacturer. CPG companies would be well-served to review and possibly update their packaging and websites to make sure it’s easy for shoppers to identify American-made products.

“Oh, No! Not Tariffs!”

Folks who align with the Democratic side of the aisle, and many who choose not to disclose their political affiliation, tend to be in the anti-tariff camp. Nearly half believe tariffs will hurt American manufacturing, while 70% expect global trade to suffer.

76% of respondents who don’t support tariffs either somewhat or strongly belief tariffs will result in higher prices for consumer goods. 46% are bracing for significant price increases on the items they typically buy. Nearly half said they’re likely to buy fewer products because of new or impending tariffs. These shoppers expect to see higher prices across the board on CPG products.

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When choosing products, those who oppose tariffs would prefer to buy American-made products, but they want products that meet their needs above all else. For this group, a “Made in the USA” sticker won’t be enough.

CPG companies should be able to explain why a price went up or down, recognizing that these shoppers are likely to spend less, or not buy at all, rather than buy a product just because it’s made in America.

The Bottom Line on Tariffs

Pro-tariff consumers say, “Tariffs will help protect America and American jobs. I’ll seek out American products and buy American. Prices might increase, but not on the stuff I buy. Tariffs are for the greater good.

Anti-tariff consumers say, “Tariffs will do more harm than good to American manufacturing and jobs, and prices will go up. I’ll buy the products I need, regardless of where they’re made, but I’d rather go without than spend more money.

Ultimately, if people see a price increase of $1, they won’t be able to say for sure that the increase was caused by a tariff. But shoppers who are aware of tariffs are going to expect some change.

Whether shoppers blame a retailer, brand or the government for changes caused by tariffs will largely depend on the information they receive. A “wait and see” approach by retailers and brands could prove costly.

As we head into the holiday season, consumer electronics and food companies in particular should have strategies to alleviate concerns about pricing and mitigate lower sales. Awareness and education will be critical to minimizing adverse changes to shopping behavior and customer sentiment.

Stay tuned for our upcoming tariffs analysis, where we’ll measure how tariffs are affecting prices of consumer goods, and the resulting changes in shopper behavior. Looking for something specific to your category or brand? Contact hello@numerator.com to get started on a custom tariffs analysis today!