U.S.
Americans rush to buy cars and appliances before Trump’s new tariffs
The Washington Post December 19, 2024
Americans are scrambling to stock up on cars, appliances and other big-ticket imports in anticipation of new Trump administration tariffs — a spending spree that could reignite the very inflation buyers are hoping to avoid.
President-elect Donald Trump has vowed to enact widespread tariffs as soon as he takes office in January, a move that economists say could lift prices for just about every type of import, including food, cars, computers and gas. Although Trump has offered few specifics, he has said his planned policies would take aim at America’s three largest trading partners, with 60 percent tariffs on all Chinese imports and 25 percent tariffs on goods from Mexico and Canada.
There are signs that price-sensitive households and businesses already are shifting their spending behavior to guard against further cost increases. New data this week showed that Americans spent $3.6 billion more on vehicles and auto parts in November than they did the month before — a notable bump in an otherwise lackluster retail sales reading. Spending on electronics and appliances also rose last month, which economists attributed to a combination of Hurricane Helene-related repairs and households preparing for new tariffs.
And although it’s not clear whether that increased demand is driving higher prices just yet, economists say it’s notable that both appliances and new vehicles got costlier in November even as inflation eased in other areas.
“It is clear that people are buying ahead,” said Diane Swonk, chief economist at KPMG. “It becomes a self-fulfilling prophecy: The more you buy, the more you push up prices in anticipation of price increases.”
Near Orlando, Deena Pryor fast-forwarded her car-buying plans after Trump’s win, figuring an early purchase could end up saving tens of thousands of dollars. She and her husband bought a Ford Explorer a few weeks ago and are planning to purchase a dishwasher and stove before the year ends.
“It just kind of clicked after the election,” said Pryor, 42, an analyst for a software firm. “I was like, ‘Whoa, hold on, he’s talking about tariffs. We should go ahead and buy now.’”
She’s hardly alone. Americans are increasingly worried that new policies, especially tariffs, could lead to a resurgence of inflation, according to the University of Michigan’s consumer surveys. The share of consumers saying it’s a good time to buy appliances, electronics and other big-ticket items “to avoid future price increases” has surged since the election, researchers there found.
At AAA Appliances in Chantilly, Virginia, sales of Frigidaire refrigerators have nearly quadrupled since the election. Consumers are snapping up ovens, dishwashers and washing machines, too, in hopes of avoiding higher costs, said owner Robert Pearson.
“The phones started ringing right away, with people saying ‘I hear we’re going to have new tariffs, we want to buy now,’” Pearson said. “There’s been a run on everything since the election.”
Pearson, who keeps a 10,000-square-foot warehouse stocked to the brim, says there isn’t much room for him to buy more. Instead of stockpiling imports, he’s looking for ways to offset potential price increases for customers. Shoppers seem much more worried about this round of price increases than they were during the Trump administration’s previous tariffs, he said, in part because of their recent experiences with inflation.
“We don’t know what tariffs there’ll be or how much they’ll trickle down to the average customer, but my focus has been making sure the customer doesn’t get hit with all of it,” he said. “We’ll have to find a way to absorb costs somehow.”
At 2.7 percent, inflation has eased significantly from a recent peak of 9.1 percent. Although prices on many goods stabilized in November, there were some notable exceptions: Appliances notched their largest increases since January, while prices for new vehicles rose at the fastest rate in more than two years, federal data shows. Economists say those increases could become further pronounced in the coming months if tariffs take hold.
On Wednesday, Federal Reserve Board Chair Jerome H. Powell said policymakers were just beginning to factor potential new tariffs into their economic forecasts for the coming year. It’s too soon to tell, he said, exactly how such policies could affect prices.
“We don’t know what will be tariffed, from what countries, for how long,” Powell said in a news conference. “We don’t know whether there will be retaliatory tariffs. We don’t know what the transmission of any of that will be into consumer prices.”
Although the specter of tariffs is not necessarily creating “new demand,” it is encouraging some consumers to buy “sooner than they otherwise would have,” said Neil Saunders, a retail analyst at GlobalData, an analytics and consulting firm.
Rutger Burgers had been planning to buy a minivan next year, after his existing car’s 10-year warranty ran out. “But election results sparked our worries that tariffs could cause prices to go up dramatically,” said Burgers, 44, an engineer in Forest, Virginia. “That gave us the push we needed.”
When he spotted a good deal a few days later, he snapped up a Kia Carnival months earlier than anticipated — for about $2,500 below the manufacturer’s asking price.
It isn’t just consumers stocking up. Major retailers are, too. Costco is looking to “pull forward inventory buying” to get ahead of tariffs, chief financial officer Gary Millerchip told investors last week.
Meanwhile, some of the country’s largest retailers, including Walmart and Lowe’s, have warned tariffs could force them to raise prices next year. At Best Buy, executives say new import fees will almost certainly result in markups on popular electronics. Prices for cellphones could increase 26 percent, while laptops and tablets could surge 46 percent, according to the Consumer Technology Association, a trade group.
“Of course, we see that the customer ends up bearing some of the cost of tariffs,” Corie Barry, Best Buy’s CEO, said in an earnings call last month. “These are goods that people need, and higher prices are not helpful.”
Small business owners say they’re struggling to keep up. Many lack the extra cash they need to buy — and store — extra products, putting them at a disadvantage compared with larger retailers.
“We simply do not have the capital to stock up,” said Michael Spadaro, co-founder of Cork & Mill, a Charlotte-based company that sells imported housewares and kitchen goods on Amazon. “We usually have about 100 days of inventory at a time, and for us to suddenly buy a year or two years’ worth of mixing glasses — it’s just not something we can do.” (Amazon founder Jeff Bezos owns The Washington Post.)
New across-the-board tariffs proposed by Trump could end up costing U.S. households an average of $3,000 next year, according to a recent analysis by the nonpartisan Tax Policy Center, a Washington think tank. Economists note that low- and middle-income households will likely feel the biggest hit, with tariffs reducing their after-tax income by 3.5 percent, according to estimates from the Peterson Institute for International Economics, a nonpartisan think tank. Those families are also least likely to have the cash available to stockpile goods now, before policy changes take effect.
For those who can afford to buy big-ticket items ahead of time, the last few weeks have been filled with strategic decisions on exactly what to purchase. Kristen Scalise recently bought a house in Philadelphia and is now racing to fill it with new appliances before January. She’s already bought a stove and refrigerator, and is considering buying a dishwasher even though there isn’t room in her kitchen for one just yet. In the meantime, she’s putting off more labor-intensive projects like renovating the kitchen and replacing a circuit board to free up cash for imported goods.
“I started thinking about things differently once I realized tariffs are coming into play,” said Scalise, 36, who works in marketing.
“Literally the morning after the election, my first thought was: I’ve got to buy a refrigerator; I can’t wait until next year.”
Andrew Ackerman contributed to this report.