Buy Now Before Tariffs Hit, Retailers Are Telling Shoppers

Businesses play up fears of a price hit in marketing goods from furniture to fishing rods

By Suzanne Vranica of The WSJ. Excerpts:

"“Pre-Tariff Sale! This is not a drill,” declares a Facebook post from Finally Home Furnishings, urging customers to order now before prices “double.” 

The online furniture retailer is one of many businesses urging customers to buy now before President-elect Donald Trump’s proposed tariffs potentially raise costs—and prices."

"Some influencers on TikTok are feeding into the tariff frenzy, urging people to buy their favorite products in bulk now."

"Tariffs have the potential to cost shoppers up to $78 billion in annual spending power, according to a recent study from the National Retail Federation."

One of the shift factors for demand and supply is expectation of future price. If buyers expect prices to be significantly higher in the near future, the demand for the product will increase today (the demand line will shift to the right).

What about supply? Normally, if sellers expect prices to be significantly higher in the near future, supply to today will decrease (the supply line will shift to the left). This is because they would rather wait to sell the product until the price has gone up.

But in this case, the price is going up because of the tariff, which is a tax. When a tax is enacted, the seller cannot pass all of the tax along to the customers, so, in effect, the seller is getting a lower price. If the tax is $1 per unit the seller might be able to pass only half of that along to the customer. So the price the seller receives in the future would actually fall. Then supply today would increase or shift to the right.

See An example of a product price rising less than an increase in a tax. There I use supply and demand lines to illustrate how this works.

Other posts on supply and demand shifts:

Expectation of future price in the news (2024)

Record Cocoa Prices Are Making Sweet Cravings Expensive (2024)

A New Age of Materials Is Dawning, for Everything From Smartphones to Missiles (2024)

Orange Juice Prices Are at Record Highs—and Could Keep Climbing (article illustrates supply and demand principles) (2023)

Supply, demand and the price of bacon (2023)

New cars, used cars and substitutes (2023)

This post is featured in an economics textbook (2023)

Is the TV show Yellowstone changing consumer's taste in clothing? (2023)

Do Wages Drive Prices, or Vice Versa? The Answer Matters for Interest Rates (2022)

Home sale prices, apartment demand and the price of subsitutes (2022)

How Supply and Demand Explain Higher Wages for Teen Babysitters (2022)

Are Expectations Helping To Raise The Price Of Lithium? (2021)

Farmers might be reducing supply of corn now in expectation of higher prices this fall (2019)

Grocery stores try to alter the tastes and preferences of men (2018)

Supply Means Producing A Good And Customers Being Able To Purchase It (2018)

How Supply And Demand Have Affected Beef Prices Recently (2017)

New Zealand sheep farmers turn to cattle as the world price of milk rises (2017)

Beef Prices Come Down As Supply Increases (2016)

Russians rush to stores to pre-empt price rises (2015)