Buy Now or Regret Later - Trump’s Tariffs Impact on U.S. Consumers
Feb 25, 2025
In recent years, U.S. trade policy has taken center stage as President Donald Trump’s administration aggressively restructured tariffs on imported goods. With sweeping measures affecting imports from Canada, Mexico, and China, these tariffs were framed as a strategy to protect American jobs, curb illegal activities, and rebalance trade war effect on consumers. However, their ripple effects on consumer behavior and the broader economy have been profound and multifaceted.
Tariff Structure and Objectives
The Trump administration’s tariff strategy has been both ambitious and unconventional. A 25% tariff was imposed on goods from Canada and Mexico—not solely as a trade protection measure, but also as leverage to address issues like illegal immigration and drug trafficking. Trump tariffs on China face a 10% tariff "above any additional tariffs," with pledges to escalate rates up to 60% and even proposals of a 200% tax on certain car imports.
While these tariffs are touted as a means to protect domestic industries and generate revenue, economists have consistently argued that they introduce distortions in market pricing and supply chain dynamics.
Tariffs, by design, act as a tax on imports. This tax creates a wedge between the world price and the domestic market price. In theory, as the imported goods become more expensive, consumers pay a premium that leads to lower overall welfare. Domestic producers may benefit from reduced foreign competition, but if the protected industries are not globally competitive, inefficiencies may arise. At the same time, economic efficiency declines as both consumers and producers face higher costs, leading to lost trade volume and misallocated resources.
Shifts in U.S. Consumer Behavior
The Rise of “Doom Spending Trend”
Recent reports indicate that approximately one in five Americans have admitted to increasing their purchases primarily due to fears of imminent price hikes—a phenomenon colloquially termed as “doom spending.” Doom spending refers to the behavior of making excessive or impulsive purchases due to uncertainty or anxiety about the future, often triggered by economic instability, geopolitical tensions or worries over looming financial concerns.
This behavior is driven by Anticipated Inflation and Psychological Impact. As tariffs raise the cost of imported goods, consumers rush to buy non-perishable items (such as food, toilet paper, and medical supplies) before prices climb further. Economic uncertainty and the anticipation of future scarcity has driven impulsive, and excessive, purchasing patterns. Surveys have shown that 22% of respondents reported significant changes in their approach to large purchases, with an additional 30% noting some level of impact. One in five Americans have characterized their recent purchases as 'doom spending', and 23% Americans expect they can go into or worsen their credit card this year.
Stockpiling behavior in U.S. and Immediate Purchasing Decisions
The interplay between tariffs and consumer sentiment creates a feedback loop with consumers now predicting that tariffs will lead to costlier goods. This spurs a “buy now” mentality—where delaying purchases could lead to regret as prices soar. Nearly a quarter of Americans expect to rely more on credit, further intensifying concerns about long-term financial stability.
Sector-Specific Impacts of tariffs on inflation
U.S. housing market tariffs
With over 70% of softwood lumber imported from Canada—and additional tariffs stacking on top of pre-existing ones—construction costs have surged. Other critical materials, like gypsum from Mexico, are also expected to see price increases. Higher input costs discourage new development, exacerbate the housing shortage, and contribute to rising home prices, which have already climbed by around 40% since 2020.
Auto industry tariff effects
The automobile industry, with its intricate cross-border supply chains, faces significant disruption. Tariffs on Canadian and Mexican parts can increase the price of vehicles—a sedan could cost approximately $2,000 more, while larger SUVs might see price hikes of up to $5,000. These increases not only impact consumer budgets but also undermine the global competitiveness of U.S. auto manufacturers.
Energy Sector
A 10% tariff on Canadian energy products—from crude oil to hydropower—can contribute to higher fuel prices, particularly in regions like the Midwest. Regions such as New England and New York, which rely on Canadian hydropower and natural gas, may see increased energy costs, affecting both households and industries.
Food and Agriculture
Although the U.S. produces a significant share of its food with Rising grocery prices USA is significant due to imports for fresh produce and specialty items. Tariffs on Canadian goods, such as maple syrup and grains, along with those affecting Mexican produce (including avocados and tomatoes), contribute to higher grocery bills. The rapid increase in imported fresh vegetables over the past two decades makes U.S. consumers vulnerable to price shocks and supply chain disruptions.
E-commerce and the De Minimis Provision
For years, the de minimis provision allowed low-cost goods (valued under $800) from Chinese retailers like Temu and Shein to enter the U.S. duty-free. The suspension of this provision—citing security concerns related to fentanyl smuggling—threatens to increase costs for a wide range of consumer products available online. This change will likely lead to higher prices on everyday items, affecting not only consumer spending habits but also the competitive landscape of international e-commerce.
Broader Economic Implications of Trump’s trade policies
Employment and the Myth of Job Protection
Trump’s tariffs were partially justified on the promise of protecting U.S. jobs. However, historical trends suggest that: U.S. manufacturing jobs have been in decline since the 1990s, with automation and global competition playing major roles. For example, after imposing a 25% tariff on imported steel in 2018, employment in the U.S. steel sector did not experience significant growth by 2020. Studies indicate that while tariffs may offer short-term relief in certain industries, they rarely translate into long-term job creation across the broader industrial spectrum.
Tariff induced Inflation and Monetary Policy Challenges
Tariffs inherently carry inflationary risks. As import prices rise, businesses face higher production costs, often leading to higher consumer prices. With inflationary pressures mounting, the Federal Reserve may be constrained in its ability to cut interest rates, which further dampens economic growth and consumer confidence. Investors worry that persistent inflation could trigger a cycle of rising costs and reduced spending, ultimately slowing the overall economy.
Weighing the Trade-Offs
Trump’s tariff strategy, under the banner of “America First,” represents a radical rethinking of global trade policy. While the administration’s goal was to protect domestic industries and generate jobs, the economic impact of tariffs has proven far more complex. Tariff effects on prices have reshaped consumer behavior through panic-induced buying and "doom spending," and introduced supply chain uncertainties across multiple sectors.
For U.S. consumers, the adage “Buy Now or Regret Later!” has taken on a very literal meaning. As prices climb across the board—from everyday groceries and home construction materials to automobiles and online goods—there is a pressing need for policymakers, businesses, and consumers alike to understand the long-term economic trade-offs at play. Only by comprehensively addressing these issues can the nation hope to strike a balance between protecting domestic interests and maintaining a competitive, globally integrated economy.
In an environment where tariffs are driving up prices and sparking panic buying, now is the moment to act. Connect with our expert team to unlock actionable insights on consumer behaviour and more.