Headlines
Consumer companies confront tariff pricing dilemma
Published by Global Banking & Finance Review®
Posted on July 31, 2025
4 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 31, 2025
4 min readLast updated: January 22, 2026
Consumer goods companies face pricing challenges due to US tariffs, with strategies varying by brand and consumer segment.
By Helen Reid, Dominique Patton and Aishwarya Venugopal
(Reuters) -From toys to sneakers and diapers, consumer goods are the focus of a range of company strategies to blunt the impact of U.S. tariffs - depending on the size of their customers' wallets.
Adidas said it could launch new products at higher prices in the U.S., Levi Strauss will cut back on promotions, and packaging giant Proctor & Gamble is introducing price hikes from next week.
Some of the world's biggest companies have warned for months, since U.S. Donald Trump's April 2 "Liberation Day" tariff announcements, that they would be squeezed by hefty duties.
Now, they are outlining how they are changing their businesses to try to cushion the blow of rising costs, uncertainty over U.S. trade policy, and waning consumer confidence.
Their different approaches reflect a growing divide about how much they calculate they can pass on to their customers without hurting sales.
Shoppers, particularly those already grappling with tighter budgets amid economic and geopolitical uncertainty, may baulk at paying more for everyday items, while middle- and higher-income consumers may be willing to splash more cash on higher-priced discretionary items.
"Tariffs will act as a regressive tax on household consumption, weighing proportionately more on low- and middle-income household spending than upper-income households," Morgan Stanley analysts said in a note.
French cosmetics group L'Oreal has not tweaked its prices to adjust for tariffs, but CEO Nicolas Hieronimus is scanning his vast portfolio of goods from Valentino perfume to La Roche-Posay face cream to check what increases customers may tolerate.
"We're still assessing all the options, and we're also waiting for the dust to settle," Hieronimus told Reuters on Tuesday.
"There is some pricing power on fragrances, but we have to also consider the elasticity of the demand, so we'll see how we manage it."
Reuters' global tariff tracker shows at least 92 out of nearly 300 companies monitored by the tracker have announced price hikes in response to the trade war, with about a third of them from the consumer sectors.
Some luxury firms may have a little more power than others. Birkin bag maker Hermes raised prices by 7% globally, with an additional 5% hike specifically in the U.S., where the company flagged it would fully pass on the effects of tariffs to clients.
Porsche and Aston Martin on Wednesday disclosed small price increases in the U.S., but the news came as they issued profit warnings, underscoring the fragility of the market.
"This is not a storm that will pass," Porsche CEO Oliver Blume said.
AS LOW AS POSSIBLE
Toymaker Mattel Inc announced in May it would raise prices on some U.S. products. Last week, CFO Paul Ruh said the company has now implemented those price increases and does not expect further hikes this year.
"Our goal is to keep prices as low as possible for consumers," he said.
Adidas, whose Samba sneaker line starts at $100 on its U.S. website, will review its pricing and decide which products it could hike prices on in the U.S. once tariffs are finalised, CEO Bjorn Gulden said on Wednesday. He declined to say how much prices might increase.
"New product that no one has seen is easier to increase than products that already exist," he told analysts on a call.
But he warned of the risks of going too far with price increases given the uncertainty over trade and a consumer he described as "a little bit depressed in many areas".
Adidas shares fell more than 11% to February 2024 lows on Wednesday as investors fretted about the strategy at a time of fragile consumer confidence and sensitivity to prices.
"I think it is very, very important that you don't run away from the lower price points and believe you can just raise prices and do less volume," he told analysts.
(Reporting by Helen Reid in London, Dominique Patton in Paris and Aishwarya Venugopal in Bengaluru; Additional reporting by David Gaffen in New York; Writing by Josephine Mason; Editing by Jan Harvey)
Consumer companies are implementing various strategies, such as raising prices, cutting promotions, and adjusting product offerings to mitigate the impact of U.S. tariffs.
Analysts from Morgan Stanley noted that tariffs act as a regressive tax, disproportionately affecting low- and middle-income households compared to upper-income households.
At least 92 out of nearly 300 companies monitored have announced price hikes in response to the trade war, including major brands like Adidas and Proctor & Gamble.
Companies must balance the need to raise prices with the risk of losing sales, especially in a market where consumer confidence is fragile and many shoppers are budget-conscious.
Luxury brands like Hermes and Porsche have implemented price increases, with Hermes raising prices globally by 7% and an additional 5% in the U.S., indicating their ability to pass on costs more easily.
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