A recent decline in tariffs on Chinese goods shipped to the US might be causing consumers to feel relief, but businesses are not sharing the savings. With temporary tariff rates at 30%, companies are rushing to complete orders and take advantage of lower rates before they increase again. This has resulted in higher production costs, including overtime pay for employees and increased prices for raw materials like plastics and metals.
Key manufacturers are facing challenges due to a surge in demand, which is causing them to increase minimum order sizes and requiring businesses to hold more inventory. As a result, the cost of storing products is rising, and companies may be stuck with higher-than-desirable inventories. This means that when calculating total costs, American businesses are paying 15-25% more than before.
While this is still a significant saving compared to the previous 145% tariff rate, consumers can expect to see prices remain elevated rather than decreasing. The added costs will likely be passed on through lower sales or reduced discounts, rather than higher prices. Furthermore, if President Trump’s tariffs are modified, businesses may not return to pre-tariff levels of pricing due to changes in customer willingness to pay.
Source: https://edition.cnn.com/2025/05/18/economy/china-tariffs-prices