Dive Brief:
- Consumer brand loyalty will likely decline if prices rise due to tariffs, according to a Wunderkind survey released last month.
- Nearly 2 in 5 consumers say they will shop for the best deals, even if that means going elsewhere.
- “From increased importance on price comparisons to a willingness to wait weeks for cheaper products, even loyalists are jumping ship if the price is right,” Wunderkind said in the report.
Dive Insight:
The Trump administration is betting that tariffs will boost U.S. manufacturing employment and raise revenue. However, the overwhelming majority of economists believe that consumers will pay higher prices as businesses pass on the costs to them, leading to declining consumer sentiment, increased competition and lower brand loyalty.
Already, surveys indicate consumers are concerned about rising prices and willing to change brands.
More than half of consumers say groceries and other essentials will be the most difficult to afford, while more than 2 in 5 are concerned about the prices of clothing/fashion and tech/electronics, according to the Wunderkind survey.
Baby boomers appear to be the most price sensitive, with about half saying they would shop for the best deals if prices rise, according to the survey. About one-third of all consumers are “actively deal-hunting,” while 13% have started shopping with other retailers over concerns about tariffs and high prices, Wunderkind said.
“For brands that can beat competitors on price, it's open season to steal share,” Wunderkind said.
Nearly half of consumers said they were more likely to remain loyal to brands that keep them informed about prices and inventory and give them exclusive offers during uncertain times. Additionally, more than 2 in 5 consumers, including more than half of Gen Z, said they would be willing to sign up for emails or texts to receive better prices or early access to deals.
More than half of consumers also said they would be willing to wait longer for a product to save money, creating a “pricing opportunity for brands with longer fulfillment windows,” according to Wunderkind.
Tariffs will cause long-run GDP to decline by an estimated 6% and wages by 5%, according to researchers at the University of Pennsylvania’s Wharton School of Business. As a result, middle-class households could lose about $22,000 over their lifetime, limiting their purchasing power.
Those estimates are supported by research on the tariffs imposed during the first Trump administration, according to Stanford University’s Institute for Economic Policy Research.
“Studies show that tariffs imposed during the first Trump administration were almost entirely borne by U.S. consumers, with disproportionately large impacts on lower-income households which spend a larger proportion of income on goods made abroad,” IEPR said in a policy brief.
