What: Consumer trust in retailers erodes as 63% of Americans believe companies are exploiting economic conditions to boost profits amid tariff-driven price increases.

Why it is important: As retailers face USD 640 billion in additional import costs, the erosion of consumer trust threatens to fundamentally alter shopping patterns and brand relationships in an already challenging market.

Recent surveys reveal a growing rift between consumers and retailers over pricing practices in the current economic climate. According to the Harris Poll's study of 2,000 adult Americans, 63% believe companies are taking advantage of economic conditions to increase profits. Furthermore, 62% of consumers suspect businesses are simultaneously raising prices while lowering product quality, creating a significant threat to brand loyalty. This skepticism comes as consumers attempt to reconcile official inflation reports with their personal shopping experiences, supported by Harvard Business School's Pricing Lab data showing increasing prices across both imported and domestic goods. The Federal Reserve Bank of New York reports that 75% of manufacturers have begun passing through tariff costs to consumers, with nearly one-third transferring all associated costs. Experts advise businesses to adopt transparent pricing strategies and consider absorbing some tariff costs to maintain customer trust and loyalty during this period of economic uncertainty.

IADS Notes: The current consumer skepticism about retail pricing strategies reflects broader market tensions observed throughout 2025. In July 2025, major retailers like Macy's implemented varying price increases, with footwear seeing rises of up to 4.2%, demonstrating the challenge of balancing cost absorption with profitability. This followed May 2025's dramatic drop in consumer confidence, where 63% of Americans believed companies were exploiting economic conditions for profit. The concern is well-founded, as April 2025 data showed projected price increases of 1-1.5%, with lower-income households facing potential 2.3% drops in disposable income. BCG's March 2025 analysis revealed staggering additional import costs of USD 640 billion, forcing retailers to fundamentally restructure their pricing strategies. The situation has created a trust deficit, with February 2025 data showing 62% of consumers expressing serious concern about rising retail prices, suggesting a potential long-term impact on brand loyalty and shopping behavior.

Retailers in the crosshairs over tariff-driven price hikes