By Amanda Groves, Senior Correspondent
Over half of U.S. companies are bracing to raise prices in response to trade tariffs enacted during the Trump administration, a new Allianz report reveals. The study, surveying 4,500 firms across nine nations, shows 54% of U.S. businesses are unable to absorb the rising costs, leading to expectations of declining turnover and a spike in inflation not seen since the early 1980s.
Companies Struggle to Absorb Tariff Costs
The Allianz Trade study paints a stark picture of the ongoing economic strain caused by sustained U.S. tariff policies. While many firms initially responded by stockpiling goods and cutting operational costs, the prolonged nature of tariff implementation has rendered such tactics unsustainable.
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54% of companies will raise prices to manage the increased costs.
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Only 22% can maintain current prices without eroding profitability.
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42% anticipate turnover losses ranging from 2% to 10% over the next year.
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Consumer inflation expectations have surged to levels last recorded in 1981.
“These tariffs have fundamentally altered our cost structures,” one respondent from a mid-sized manufacturing firm told The Guardian. “We’ve tried to hold the line, but price increases are now unavoidable.”
Corporate Giants Confirm Price Hikes
Industry leaders such as Walmart and Mattel have already confirmed forthcoming price adjustments. Initially, these corporations leveraged inventory buffers and strategic sourcing to shield customers. However, as trade tensions linger and raw material prices soar, executives are signaling a need to pass the burden on.
“We’ve reached a tipping point,” said a Walmart spokesperson in a recent Reuters interview. “Our margins are under pressure, and we’re forced to recalibrate.”
The retail giant noted that while it had resisted raising prices for as long as possible, continued strain on its supply chain from tariffs and shipping costs left few alternatives.
Inflation and Consumer Impact Loom Large
As businesses shift rising costs to consumers, inflationary pressures have surged. Allianz’s analysis notes that consumer inflation expectations are at a four-decade high, posing challenges for household spending and potentially shaping Federal Reserve policy.
Economic analysts point out that these price hikes could stoke broader inflation trends across sectors, from electronics and toys to clothing and household goods.
“Inflation is becoming embedded,” said James Knightley, Chief International Economist at ING, speaking to Investopedia. “If major players like Walmart are lifting prices, others will follow.”
Dimming Outlook for Trade and Exports
Beyond the domestic market, U.S. firms are also feeling the pinch internationally. The report indicates that 60% of surveyed companies foresee negative impacts on their business operations due to tariffs, with export optimism falling sharply.
“American firms are facing a double whammy,” explained Allianz Chief Economist Ana Boata. “Higher input costs at home and reduced competitiveness abroad.”
This sentiment reflects growing concern over the long-term efficacy and sustainability of trade protectionism. Smaller exporters, in particular, reported reduced orders and diminished foreign interest due to inflated U.S. pricing structures.
Strategies and Sectoral Variations
The impact is not uniform across all industries. While manufacturers and retailers are hit hardest, sectors such as technology and pharmaceuticals have shown more resilience, leveraging global supply chains and high-margin products.
To adapt, companies are exploring alternatives such as:
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Nearshoring supply chains to mitigate future tariff exposure.
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Automating production to cut long-term labor costs.
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Hedging currency and raw material contracts to manage volatility.
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Investing in digital logistics to improve inventory accuracy.
Still, even the best-prepared firms face an uphill battle.
Long-Term Policy Uncertainty
With tariffs remaining a central point of debate in U.S. trade policy, many companies are urging for greater clarity. Business leaders have called for a bipartisan review of the current tariff regime to balance economic competitiveness with national interests.
“Policy unpredictability is as damaging as the tariffs themselves,” noted Boata. “Firms need stability to invest confidently in the future.”
In the run-up to the 2024 presidential election, trade policy is expected to become a focal issue once again. Analysts say businesses are watching closely for any indications of changes in direction from Washington.
Visual Suggestion
Image Description: A high-resolution photo of a U.S. manufacturing facility, with signs of increased production costs—such as sparse workforce presence, elevated raw material stock prices on digital boards, and partially completed goods awaiting shipment.
