Consumers are Stressed about Tariffs. For Companies, It’s More Complicated

American consumers are anxious about tariffs. The companies that serve them are, too, though not all of them are bracing for the worst.

Consumer sentiment in February took the biggest monthly hit seen in three years, according to The Conference Board’s Consumer Confidence survey, which showed that Americans are concerned tariffs will spur inflation.

Businesses are exploring how to protect their profits through supply chain changes and price increases, executives said during recent conference calls. While some consumer-focused companies worry tariffs will hurt business, others are confident they can handle—or even reap rewards from—higher import costs.

President Donald Trump said this week that he plans to impose a 25% tariff on products from Mexico and Canada, beginning Tuesday. He also said the U.S. would raise a tariff on goods from China to 20% and has recently talked about adding tariffs to items from other regions, including the European Union.

Tariffs Would Lead to Price Hikes at Some Companies

Many companies said they’d raise at least some prices if tariffs were enacted—from the cosmetic company Sally Beauty (SBH) to Hamilton Beach Brands (HBB), which sells small household appliances. 

A number of businesses said they worked to blunt the potential blow by diversifying their supply chains. Steve Madden (SHOO) diminished sourcing from China by about 20% since the last quarter, CEO Edward Rosenfeld said. But selective price increases will still be necessary, he said.

Higher prices may not dramatically alter the outlook for some companies. Birkenstock (BIRK), which finishes its shoe assembly in Germany, has been able to raise prices without consequence in the past, CFO Ivica Krolo said on an earnings conference call last month.

“The good news here [is] that we have, historically, [had] the ability to take pricing action globally that offsets these inflationary pressures, including tariffs, without any impact on our business,” Krolo said, according to a transcript made available by AlphaSense.

‘We’ve Been Through This Before’

Some large companies see their size as an advantage in navigating tariffs. Coca-Cola (KO) could rely more on plastic bottles than cans, CEO James Quincey said on an earnings conference call in February. He added that even if the company pays more for aluminum, it’s “not going to radically change a multibillion dollar U.S. business.”

Walmart (WMT) knows how to find value for consumers amid tariffs, executives said. So does Home Depot (HD), executive vice president of merchandising Billy Bastek said on an earnings call this week.

“We’ve been through this before,” Bastek said, according to a transcript made available by AlphaSense. “With our scale, we feel that we’re as well or better positioned than anyone in the marketplace.”

Some Companies See Chance to Benefit

A few companies said they may even benefit from tariffs.

Roku (ROKU) doesn’t expect tariffs to impact its product margins. But they could raise the cost of “higher end” TVs, prompting people to move to less expensive options and driving up demand for Roku, said Mustafa Ozgen, president of devices, products and technology.

Newell Brands (NWL), which sells Yankee candles, believes tariffs present both headwinds and potential benefits. The company has ramped up its production capacity in the U.S., CEO Christopher Peterson said. This gives Newell an advantage over competitors—and potential clients—he said on an earnings call in February.

The company has been informing retailers it can quickly add manufacturing capacity in the U.S. “on a first come, first serve basis,” Peterson said.