Consumers have their limit when it comes to tariff-driven price increases

customer at a clothing store — Consumers will abandon purchases if price hikes due to tariffs cross certain limits. (Source: Bigstock)

By Sean Cao June 9, 2025

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Recent studies have shown that consumers will abandon purchases if price hikes due to tariffs cross certain limits or if there is a lack of transparency from retailers.

According to data from ESW, six in 10 US consumers will not absorb more than 10 per cent of tariff-driven price increase. Many of them demand transparent communication about price hikes as well as free shipping and loyalty rewards in exchange for the higher costs.

The study also found that 70 per cent of consumers will reduce overall spending once tariffs go into effect, with Millennials topping the list.

About 45 per cent of shoppers have pulled forward spending on electronics and stocked up on groceries ahead of the tariff implementation. Gen Z leads this trend as 58 per cent of them have been spending more on high-priced items to avoid potential tariff increases.

“Market volatility and increased costs due to tariffs are causing US shoppers to change their spending habits,” commented Eric Eichmann, CEO of ESW.

“As global retailers and brands strategize to offset these new developments, they must prepare to offer more perceived value, price transparency, and flexibility in order to retain brand equity and loyalty,” he added.

Similarly, a survey by First Insight revealed that 73 per cent of customers would feel frustrated by price increases.

Nearly 80 per cent of consumers said they would be loyal to brands that absorb tariff-related increases, while three in four would abandon their favorite label for a cheaper alternative.

While 68 per cent of brand and retail executives expect a negative reaction from customers, 83 per cent plan to raise prices anyway. About 77 per cent of them have preemptively communicated price increases directly with customers.

“While most retailers won’t be able to avoid raising prices altogether, unilateral price increases are a surefire way to lose customer confidence and trust,” said Greg Petro, CEO of First Insight.

“There are more informed ways of approaching pricing strategies and offsetting the burden on customers. Customers are forthcoming about what they’ll spend, what they’ll buy and where they’ll tap out – retailers simply need to engage them and communicate what they’re up to every step of the way.”