How Do Tariffs Affect Prices and What You Should Say to Customers 🪡

Tariffs are back in the spotlight. As global tensions shift and trade policies tighten, businesses are once again grappling with rising costs on imported goods. For some, this is a familiar challenge. For others—especially those who built lean, just-in-time supply chains—it’s a disruptive shock. The big question now is, how do tariffs affect prices, and should businesses tell customers that tariffs are behind their price hikes?

It sounds simple, even fair. But in practice, transparency on tariffs puts businesses in a difficult spot. Do you risk looking political or confrontational by naming tariffs directly? Or do you stay silent and hope customers don’t question the increase? Many businesses are stuck in the middle. Either way, the pricing decisions made today send signals to customers, competitors, and governments alike.

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The Pricing Communications Dilemma No One Wants to Touch

Let’s say you’re a retailer importing homewares, or a clothing brand sourcing from Europe or Asia. Suddenly, the costs of goods rise 5–10% because of new tariffs. You didn’t budget for this. You’ve already locked in prices with buyers or set retail tags on seasonal stock. How do tariffs affect prices in this case, and what are your options?

Some businesses decide to absorb the increase—for now—especially if the tariff is small or temporary. Others pass the cost straight to the customer, sometimes with a price hike, sometimes with a surcharge. Still others take a halfway approach: they spread the increase across different products or quietly bake it into revised base pricing.

Take the example of Chinese e-commerce giant Temu, which now lists “import charges” clearly at checkout. It’s a bold move toward price disclosure. In contrast, Amazon reportedly considered showing customers the tariff impact on prices but abandoned the plan after political backlash. The White House labelled it “hostile.” That’s all it took for Amazon to hit pause.

The message was clear—tariff talk can quickly become a lightning rod. And so, many businesses choose the path of least resistance: silence.

How Do Tariffs Affect Prices When Pricing Gets Political

You might assume pricing is a commercial issue. But in today’s climate, even pricing has become political.

When Amazon floated the idea of itemising tariffs on customer receipts, it didn’t intend to make a political statement. But that’s how it was received. Transparency became a perceived act of defiance. For many retailers, that served as a warning: calling out how tariffs affect businesses might be good price communications, but bad politics.

This fear isn’t unfounded. Some business owners worry that explaining how tariffs affect prices could alienate customers who see the messaging as partisan or self-serving. Others fear reputational risks if the explanation comes across as blaming the government or playing the victim.

So instead, businesses avoid naming the cause. They issue generic statements like “increased global costs” or “supply chain pressures,” hoping to soften the blow. But this lack of clarity can backfire, too.

The Link Between Price Disclosure and How Tariffs Affect Prices

Transparency sounds ideal in theory, but it’s rarely straightforward in practice.

On the one hand, clear communication builds trust. Customers appreciate honesty, especially when prices rise unexpectedly. According to recent consumer surveys, people are more likely to accept price increases when they understand the reason. Like GST or delivery fees, if explained properly, how do tariffs affect prices becomes part of normal price disclosure, not something suspicious or opportunistic.

On the other hand, how you frame tariff costs matters. Listing a “tariff surcharge” on an invoice can look like an add-on or even a money grab. Some customers feel nickel-and-dimed. Others react emotionally to the word “tariff” itself, associating it with politics, inflation, or economic hardship.

That’s why some businesses, like South Carolina-based tile distributor Palmetto Tile, now bundle the cost of tariffs into base pricing. “It feels less like a slap in the face,” one executive said, describing how separate line items frustrated customers. In contrast, other companies like HVAC supplier Norman Wright take the opposite approach—using tariffs as a clear part of their price negotiation, especially when dealing with steep increases.

The best strategy depends on your customer, your product, and your brand. But the key is consistency and care in your messaging.

How Tariffs Affect Businesses—and How They Should Set Prices

The most successful businesses aren’t panicking—they’re planning. They’re asking how do tariffs affect prices and adjusting their pricing strategy under tariffs accordingly. Here’s what many are doing to stay ahead:

1. Audit your exposure. Know which SKUs are affected by tariffs, where your suppliers source materials, and what duty rates apply. If you don’t know your costs, you can’t price confidently.

2. Segment your response. Not all customers are equal. For loyal buyers or key accounts, you might absorb the cost temporarily. For others, you can gradually pass on the increase. This shows consideration and strategy.

3. Communicate with care. Don’t ignore the issue. Use calm, factual language: “Due to new import tariffs, our cost to source this product has increased. We’ve worked to minimise the impact where possible.” Avoid emotional or political tones. Stay neutral. Stay professional.

4. Review supplier contracts. Sudden price increases after deals are agreed upon can sour relationships. Add tariff clauses or review terms regularly to account for volatility.

5. Diversify and renegotiate. Many US and Australian businesses are reshoring or near-shoring where possible. Some are pre-purchasing inventory to lock in lower costs before tariffs take effect. Others are renegotiating pricing with suppliers on the grounds of fairness.

6. Build pricing flexibility. Consider adding small buffers to future pricing models, or use discounting and loyalty schemes to soften the blow. If a surcharge is needed, be clear and upfront—but not apologetic.

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How Strategic Pricing and Disclosure Build Trust

At the end of the day, pricing isn’t just a financial decision—it’s a strategic message. Whether you absorb tariffs, pass them on, or explain them, each choice says something about your brand. Avoiding the conversation might feel safe, but it can lead to confusion, mistrust, or even lost customers. By contrast, thoughtful transparency strengthens your position—especially in uncertain times. People understand inflation and wonder how do tariffs affect prices. What they don’t understand is silence.

Yes, tariff pricing is risky. It can be political. But done right, it’s an opportunity—to build trust, show fairness, and prove your pricing reflects more than profit. It reflects principle.

No business wants to lose trust over something they could’ve explained. Tariffs are complex, but your pricing story doesn’t have to be. Start the conversation now—before confusion turns into frustration. If you’re not sure where to begin or need help finding the right balance, let’s talk. You don’t have to face this alone.

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Are you a business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

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