Eliza Brashares and Matt Stinnett contributed to this blog.
While it’s not yet clear exactly how President Trump’s proposed new tariffs on goods from Mexico, Canada, and China will be implemented, they’re likely to have a major impact on US shoppers.
These additional costs may trigger new price increases and further reduce spending at a time when budget-conscious consumers are already scrutinizing purchases and cutting back in response to inflation.
You need to understand how new tariffs may impact your customers and how they spend their money—and what you need to do now to prepare.
What we know about Trump’s 2025 tariffs so far
To make sure your brand is ready for the changes coming your way, you first need to understand what these policies mean for both customers and businesses.
In case you need a refresher, tariffs are taxes the government places on imports. Technically, these taxes are paid by companies importing the goods, but a portion of the cost is passed onto US consumers through higher prices on products.
Trump has said new tariffs in 2025 aim to create more domestic factory jobs, lower food prices, allow the government to subsidize childcare, and shrink the federal deficit. But tariffs on Canadian and Mexican imports could also cause major disruptions to the food, energy, and auto categories for Americans.
Right now, the situation around these policies is still evolving rapidly. Additional tariffs are already leveraged on Chinese products, and may be implemented on Mexican and Canadian goods as soon as early March, after an initial 30-day delay instated by the US when Mexico and Canada agreed to border control measures.
How tariffs may impact US consumer behavior
So what will these policies mean for your customers?
Inflation and higher prices for essential goods have been a problem for US consumers throughout the 2020s, and tariffs may make many products even more expensive.
Source: eMarketer
The increased costs of the proposed tariffs will be too high for US retailers to absorb, so those price hikes will be passed along to consumers. This may result in prices too high for many shoppers: for example, if a universal 10% tariff was imposed, consumers would lose $1,200 of purchasing power on average (based on 2023 income levels).
Concerns over new government policies have recently led consumer sentiment to fall for the first time in six months. Sentiment was down across the board: income levels, age groups, and political affiliation. When asked about tariffs, about 19% of consumers said they believe higher tariffs are better for the economy, while 62% preferred lower tariffs, according to the University of Michigan’s Surveys of Consumers.
Beyond tariffs, shoppers are worried about income and employment: 47% of consumers say they think unemployment will rise in the next year, while expectations around income growth have weakened.
Rising prices affect consumers on both sides of the aisle. Regardless of political affiliation, US voters overall think lowering costs is a key issue for the current administration to address.
That’s no surprise–consumers are already feeling the pinch. Shopper purchasing power has decreased, as has discretionary spending.
This trend will likely also apply to price increases due to tariffs: according to a CivicScience survey, three out of four consumers say they plan to reduce their spending if tariffs cause higher prices. The survey indicates most impacted categories will be experiences like dining and travel, as well as apparel.
Across the board, shoppers will be focusing on buying essentials rather than spending on discretionary items and experiences.
Higher prices may also drive consumers to seek cheaper alternatives to products or services or otherwise reduce spending. Shoppers will be looking for value, and brands that offer basic or more affordable products will have an advantage reaching consumers as they become more and more financially stretched.
Source: eMarketer
Beyond essentials, people will still be looking to buy some treats; for example, the US Bureau of Labor Statistics found that women continued to purchase cosmetics as a “small comfort” despite rising prices.
What brands can do to prepare
Brands looking to reach shoppers in the current economic climate will need to adapt to their audiences’ changing needs and shopping habits. It can be challenging to keep up with ever-evolving political and economic circumstances, but don’t despair: while consumers may change spending habits in response to economic pressure, they’re still spending.
That means there’s still an opportunity for brands to capture those customers if they play their cards right.
Look to the data
The first step in reaching any audience is understanding their priorities and perspectives. This is doubly important as consumers seek ways to budget and get better value for their money rather than cutting spending entirely.
You need to anticipate how your target audience will be shifting their spending habits so you can align your strategy with that mindset. To do that, you’ll need to take stock of those shoppers’ buying patterns as they are today–what was true for your customers in the past might no longer apply in the wake of skyrocketing costs.
Take the time to review your data to understand what the current economic climate means for your different audience segments based on income, market, geography, and other demographic considerations. You can then build your marketing, pricing, and promotional strategies around those learnings.
Advertise with empathy
Just understanding how your customers are buying won’t be enough–you need to consider what your audience is dealing with, both practically and emotionally, when it comes to reduced spending power and offer solutions.
Make shoppers feel like your brand is on their side by emphasizing your product’s value to justify higher prices and offering sales or discounts. As people shop around for deals, focus on retaining existing customers by improving loyalty programs, building community, and providing personalized experiences.
Above all, it’s crucial to stay the course when it comes to advertising: reducing spend in an attempt to save short-term profit margins can cost brands larger growth opportunities in the long-term. Rather than cutting media spend prematurely, leverage data to spend smarter and focus on impactful activations.
Source: McGraw-Hill Research
According to McGraw-Hill Research’s analysis of the sales growth and ad expenditures of 600 companies before, during, and after the 1981-1982 recession, sales of companies that were aggressive recession advertisers had risen 256% over those that didn’t keep up their advertising just three years later.
To succeed in 2025’s rapidly changing economic environment, you need to:
- Consider long-term opportunities in your strategic planning–don’t just focus on your short-term gains
- Invest in the tools you need to leverage data to not just inform but drive your investment strategy
- Use your data to build an empathetic approach to specific audiences that applies to your messaging, creative, and promotional calendar