Will Retaliatory Tariffs Harm the American Consumer?

Tariff talk is heating up both in the United States and abroad — with Canadian Prime Minister Justin Trudeau promising a “forceful but reasonable” response to tariffs the U.S. imposes, per The Guardian. Both Canada and Mexico drew plans for retaliatory tariffs prior to the temporary pause of President Donald Trump’s 25% tariffs on imports from the neighboring nations — but the exact particulars remain unclear.

So far, according to The Financial Post, Trump has announced a variety of tariffs to take effect on Canada, Mexico, China, and other major trading partners, coming into effect in time frames ranging from early March through April 2. So far, China has been hit with a 10% tariff, to which it responded with a 10% to 15% tariff “applied to crude oil, liquefied natural gas, farm machinery and select other products from the United States,” as NPR detailed. Further, Trump has threatened tariffs on Europe, Taiwan, and other jurisdictions.

With the atmosphere surrounding tariffs, and retaliatory tariffs, remaining uncertain, RetailWire consulted with members of its BrainTrust on the subject.

Will Tariffs, and Retaliatory Tariffs in Particular, Be Harmful to the American Consumer?

The response from RetailWire’s BrainTrust members concerning the question of whether tariffs might harm the American consumer seemed to drive a near-consensus opinion.

“It will be extremely challenging for retailers to find ways to avoid passing tariffs on to the consumer. The three most likely ways they would do this would be renegotiating contracts with suppliers (though suppliers aren’t likely to be receptive to this), diversifying their supplier portfolio so that they’re sourcing from countries that are not facing the tariffs, and leaning on domestic suppliers instead,” Melissa Minkow, director of retail strategy for CI&T, wrote.

On the subject of retaliatory tariffs more specifically, she elaborated:

“I don’t really see a world in which consumers don’t struggle because of these. Retailers in countries where these are levied will have to charge more for American goods. If they don’t, they would potentially be upcharging on domestic products to balance it out, which would be punishing domestic suppliers, and that wouldn’t make any sense. They’d more likely just not sell American goods to avoid having to pass the retaliatory tariffs onto the consumer.”

Jeff Sward, founding partner of Merchandising Metrics, joined the discussion to offer a counterpoint to the common view that tariffs simply burden consumers with higher taxes, highlighting potential positive outcomes instead.

“Tariffs have been around for as long as trade has been around. Which is to say a long time. Tariffs can be smart. They can level the playing field. They can incentivize or discourage specific trade practices. But it’s useful to remember that tariffs are also a tax. They are a tax paid by the ultimate consumer of the product that is tariffed,” he began.

“When products are tariffed, consumers are taxed. And that’s all OK. Imported products that are tariffed/taxed can still be a better value for the consumer than if the same product was produced domestically — if it even can be produced domestically. Everybody still wins and there is revenue generated in the process,” he added.

Meanwhile, Lisa Goller, B2B content strategist for Lisa Goller Marketing, offered a broad perspective concerning the potential U.S.-Canada trade war, pointing to increased domestic consumption and marketing efforts from both parties, as well as new international partnerships and trading arrangements.

“The U.S.-Canada trade war will affect consumers, workers, and supply chains on both sides of the border. To stay resilient, Canadian and U.S. supply chains will look abroad for new trading partners. Expect more domestic sourcing and production like the ‘Buy Canadian’ campaign. Private labels may start to look like patriotic purchases. Thrift stores may inspire more consumers to reuse old items rather than buy new imports,” she suggested.

On the other hand, David Biernbaum — CEO and senior partner, David Biernbaum & Associates, LLC — pointed toward the notion of tariffs as a negotiation tool, a lever to exact more desirable trade deals and economic results.

“Like everything else in the United States these days, tariffs are a fierce political issue. While pro-Trump citizens understand the benefits, the anti-Trump contingent understands the drawbacks. While I understand both sides, I am inclined to trust President Trump’s strategies based on our economy’s history under his direction,” Biernbaum began.

Biernbaum then produced a list of pros (including protection of American jobs, national security, domestic production and supply chains, and enhanced government revenue) as well as a list of cons (potentially higher prices for consumers, damaging retaliatory tariffs) before indicating that negotiations had not played out in full, adopting a wait-and-see approach.

“In the hands of President Trump, the use of tariffs as a ‘negotiating tool’ may well be their primary function… But in my opinion, the bark will be louder than the bite, and the United States will realize important benefits without actual, or full, implication,” Biernbaum concluded, citing concessions made by Canada and Mexico (regarding border security and the flow of fentanyl) and Colombia (concerning the return of deported migrants from the U.S.) as evidence of negotiations producing desired results.

Are Trump’s Tariffs Ultimately More of a Negotiation Strategy Than Anything Else?

Biernbaum’s suggestion that Trump’s tariff plans represented a negotiation strategy above all else appeared to find ground with other analyst opinions.

Neil Saunders, managing director for GlobalData Retail, seemed to at least partially concur.

“While there are no new tariffs for the moment, President Trump’s request for a review of trade puts the world on notice that more tariffs could well be coming and that more countries are going to be targeted. As the review is sweeping, there is now no safe ground for those making goods outside of the U.S. and importing them,” Saunders began, moving on to underscore the difficulties that manufacturers and supply chains might endure as part of a “cat and mouse game” given the shifting targets under tariff scrutiny.

“All that said, this is largely about negotiation for President Trump. He probably will not impose tariffs if other countries liberalize their access to U.S. firms. As such, a lot depends on the reactions of other nations, and many are now reviewing trade policies,” Saunders added.

Sward also appeared inclined to agree, at least in part.

“The problem now is that we are having this conversation under the umbrella of ‘retaliatory tariffs.’ Announced suddenly and effective suddenly. Oh, wait, not effective suddenly. Just wanted to get your attention,” Sward quipped, before gesturing toward the nature of Trump’s current tariff strategy as a double-edged sword.

“Tariffs make all the sense in the world as negotiating tools and points of leverage in international relationships. Tariffs as agents of uncertainty, confusion, and chaos are not going to serve us well. Inflation never needed a malice aforethought turbo-boost,” he concluded.

Vast Majority of Canadians Back Retaliatory Tariffs, if Push Comes to Shove

The president’s tariff plan, and frequent musings about annexation of Canada as the “51st state,” appear to have struck a chord with Canadian citizens.

According to a recent Leger poll cited by CTV News, 70% of Canadian respondents were either somewhat or strongly in favor of imposing retaliatory tariffs against American goods should the United States impose tariffs against Canada. Further, between 62% and 63% of those polled indicated they had already curtailed purchases of American products — and 30% stated they had canceled a planned trip to the U.S.

Sébastien Dallaire, Leger’s executive vice president for Eastern Canada, said the results reveal some degree of anger among the Canadian populace over the tariff matter.

“It speaks to the level of anger on the part of Canadians, that they are willing for the government to take actions that in the end will hurt our pocketbook,” he said.

“They’re not happy and they’re finding alternative ways to spend their money, trying to support more local products, move away from American products or brands,” he continued. “And so it’s a pretty significant movement.”