Online shopping behavior has been significantly altered due to Trump's tariff policies, according to a recent study.
In a significant shift for the U.S. economy, the tariffs announced by President Trump are set to dramatically increase the effective U.S. tariff rate on goods imported from key trading partners. If implemented as planned, the effective tariff rate could rise above 25%, up from the 3% prior to the announcement and the 15% during the implementation pause.
This tariff hike has weighed on the economy and financial markets at times in the first half of the year, with uncertainty over tariffs being a recurring concern. The impact of these tariffs is particularly noticeable in the e-commerce sector, where consumers are adjusting their shopping habits to avoid tariff-related costs.
Recent research reveals that around 80% of consumers report that tariffs influence their shopping decisions. This shift towards more informed, price-conscious shopping behavior is evident, with 40% of consumers actively monitoring price changes due to tariffs. Consumers are conducting extensive research to find the best deals, especially on deal days like Prime Day, indicating a shift towards more informed, price-conscious shopping behavior.
The tariffs are also impacting brand loyalty. Nearly half (49%) of consumers would be more loyal to brands that absorb tariff costs rather than passing them on to customers. Transparency about tariffs and pricing is increasingly important in retaining customer loyalty.
If prices rise due to tariffs, 88% of Americans say they would change their shopping habits. One-third would cut back on purchases, while another third would switch to cheaper brands. Despite a desire to support U.S.-made products, many consumers prioritize price and are unwilling to pay significantly higher prices, generally tolerating up to a 10% premium for domestic goods but walking away if prices rise further.
The tariffs are also causing consumers to delay purchases due to price uncertainty. About 34% of consumers delay purchases due to price uncertainty linked to tariffs, contributing to a slowdown in online shopping growth.
In response to these tariff-driven changes, consumers are making trade-offs such as prioritizing essential purchases, adopting store brands, or skipping certain purchases altogether to mitigate the impact of higher prices caused by tariffs. Free shipping remains a critical factor in purchase decisions, with 97% of consumers saying it affects their ordering behavior, even as tariffs and delivery cost increases challenge retailers.
The Atlantic Council states that the effective tariff rate would rise above 25% if the "Liberation Day" tariffs are implemented in full. However, a trade deal with Vietnam on Wednesday has lowered this to 20%. The Trump administration's tariff policies aim to increase domestic manufacturing, but just 20% of surveyed consumers are consciously buying more "Made in the USA" products due to new import tariffs.
The Federal Reserve Chair, Jerome Powell, confirmed that tariff concerns have prevented interest rate cuts so far this year. The tariffs announced by President Trump on April 2, dubbed "Liberation Day" tariffs, are scheduled to take effect on July 9, subject to trade deals or a decision to delay them. These tariffs are taxes on imported goods that are paid by the importer, who typically passes some or all of the higher cost on to consumers through higher prices.
In conclusion, the tariffs in e-commerce are leading to heightened price sensitivity, increased research-driven shopping, and greater demand for brands to be transparent and absorb costs. These factors drive consumers to alter buying patterns by seeking deals, favoring brands that mitigate tariff impacts, and delaying or reducing purchases when prices rise. Retailers must strategically manage pricing and customer communication to maintain loyalty and adapt to these tariff-driven behavioral changes.
- The effective tariff rate, expected to rise above 25%, is causing a significant shift in consumer shopping behavior, with 88% of Americans stating they would change their shopping habits if prices increase due to tariffs.
- Consumers are becoming more informed and price-conscious, with 40% actively monitoring price changes due to tariffs and nearly half (49%) preferring brands that absorb tariff costs rather than passing them on to customers.
- Tariffs are having a noticeable impact on the e-commerce sector, with many consumers delaying purchases due to price uncertainty and adopting strategies like prioritizing essential purchases, adopting store brands, or skipping certain purchases altogether.
- The Federal Reserve Chair, Jerome Powell, has confirmed that tariff concerns have prevented interest rate cuts so far this year, highlighting the broader economic impact of the tariffs.
- As tariffs continue to influence consumer decisions, retailers must strategically manage pricing and customer communication to maintain loyalty and adapt to these tariff-driven behavioral changes in the economy, business, and finance industries, while also considering the ongoing impact of taxes and politics on the general news landscape.
