U.S. tariffs could cast shadow over holiday shopping season

ST. JOSEPH, Mo. (News-Press NOW) -- The busiest time of year for U.S. shoppers is right around the corner as concerns linger about prices at the checkout line.

From big market metropolitans to smaller cities like St. Joseph, the annual holiday season will once again bring crowds of shoppers in search of the ideal item; however, shoppers are likely to see a new wrinkle added to the holiday shopping equation this year, in the form of tariffs.

Since returning to the Oval Office, the Trump Administration has imposed numerous emergency tariffs on multiple U.S. trading partners. This includes countries such as China, Canada, Mexico and the European Union.

Shopping data from Mastercard shows some of the popular items seeing an uptick in tariff rates and price increases, including video games and consoles, which have risen by 10%, as well as chocolate (5.2%) and clothing (25.4%). Shoppers are also likely to see higher costs for holiday decorations and toys.

While a key part of national conversations has focused on the direct impacts on larger U.S. manufacturers and companies, local businesses are seeing the trickle-down effect, including stores in St. Joseph.  

"It's bounced around so much that we're a little numb to all of it. We've got products made all over the world," said Mark Antle, owner of Leibowitz Menswear. "I don't try to track the percentages of tariffs depending on what country the product originates from. I still have a business to run, I can't be concerned with dialing back."

A staple in St. Joseph since 1912, many of the products Leibowitz sells are imported due to materials being sourced from different countries of origin.

Despite the challenges and the unpredictable nature of tariffs, the longtime store has navigated through the situation successfully to this point, focusing on its calling card of offering customers a variety of options.

"In our business, you still have to present a great mix of merchandise and a good selection," he said.

According to the Tax Foundation, a nonpartisan research firm based in Washington, D.C., the average applied tariff rate on all imports has risen to 17.6% and the average effective tariff rate (the actual burden faced by taxpayers) to 12.5%, the highest since 1941.  

Steven Durlauf, a distinguished service professor at the Harris School of Public Policy, noted that when a tariff is implemented to raise taxes on imports, it negatively impacts the costs of goods and the overall production process.

Durlaf used the recent changes in the steel industry as a prime example of the implications that can occur.    

"In the first Trump Administration, it's argued (that the tariff) helped steelworkers because it'll create jobs in the steel industry, which is true," Durlauf said. "But, what you do by raising the price of steel and generating more domestic steel is you've also raised the price of input to the production in the United States. The losses of jobs in steel-intensive industries were 10-to-15 times as large as the improvements in steel." 

Durlauf explained, while the holidays and now-resolved government shutdown may appear to exacerbate the effects of tariffs, they won't lead to dramatic price increases immediately. However, increased supply and demand for popular products will eventually pass the cost of the tariff from the producer to the consumer.

"There are debates about what fraction of the tariff ... or what fraction of the sales tax is paid by the consumer versus the firm," Durlauf said. "In terms of tariffs, that's the same question. I think the best evidence is something on the order of 80% of the tariffs are eventually passed on to consumers. I say eventually because the firms are thinking about customer loyalty, preserving relationships, among other things. They don't instantaneously pass on the tariffs.”

For all businesses having to wrestle with higher costs on the shelves, the long-term hope is that a form of relief will come at a certain point, whether it be at the end of 2025 or sometime in 2026. 

The lingering question remains for U.S. consumers: are higher tariffs a temporary measure to balance trade markets, or the new normal moving forward?