Americans Are Stockpiling to Get Ahead of Tariffs: Some consumers are snapping up computer parts, vacuum cleaners, coffee and olive oil before levies take effect

By Jasmine Li and Rachel Wolfe of The WSJ.

This is a follow up on yesterday's post. When buyers expect higher prices in the near future their demand today increases.

But I also said that because sellers cannot pass all of the increase in a tax (in this case tariff), it means that once the tax or tariff goes into effect, the seller will be getting less per unit sold. So they might try to sell more today, meaning that the supply line shifts to the right. In red below one executive even says that sellers cannot pass all of the tax increase along to the buyers.

Excerpts from The WSJ article:

"Tariff-conscious consumers are stockpiling goods and rushing to upgrade old cars and appliances to get ahead of potential price increases. 

A quarter of Americans surveyed said it was a good time for major purchases as they expect prices to go up next year, up from 10% a month prior and a record high, according to the University of Michigan’s monthly survey of consumers. And a third of the 2,000 people surveyed recently by CreditCards.com said they were buying more now because they feared tariffs. 

Some economists warn that by spending as though inflation is coming, people could already be pushing it higher. The consumer-price index of goods and services grew 2.7% year over year in November, according to the Labor Department, slightly higher than in the prior month. The boost was driven in part by a surge in durable-goods purchases some shoppers said are related to President-elect Donald Trump’s threats of tariffs on imports from countries including Canada, Mexico and China.

“People can make a judgment that, ‘Well I thought I was going to buy a TV in the next 12 months. Maybe I should buy it in the next 12 weeks,’” said Robert Barbera, director of the Center for Financial Economics at Johns Hopkins University. "

"“If the run is big enough and the shortage is big enough,” a retailer will have to raise prices, said Harrison Hong, a professor of economics at Columbia University.

Hong points to a ban on nonbasmati rice exports from India in 2007, which likely caused price increases for U.S. consumers. Americans hoarded bags of rice, exacerbating shortages. The products and stores with the highest levels of hoarding saw greater price hikes a few months down the line.

Furthermore, inflation expectations matter for future inflation. So it is possible that retailers and manufacturers are preparing for higher tariffs by raising prices now, in expectation of higher import prices, said Paul Ashworth, chief North America economist at Capital Economics.

“The notion that you think prices are on a particular trajectory plays elementally in your decision about how to raise your prices, or what your wage demands are,” said Barbera of Johns Hopkins.

Businesses in the U.S., which imported around $3.2 trillion of goods in 2022, are making plans for the worst-case scenario. Some are stocking up on imports to get ahead. Others are urging shoppers to buy now before prices go up. 

Best Buy Chief Executive Corie Barry said on a November press call that “the vast majority of that tariff will probably be passed onto the consumer as a price increase.”" (notice he does not say all-again, if that is the case, sellers end up getting less per unit)