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As Donald Trump was being sworn in as president, US consumers were already preparing for what could be the biggest change in global trade policy in a half century.
In a survey conducted in December and early January, many said they expected Trump to impose tariffs of up to 50 percent on US trade partners. About 40 percent said they are likely to stockpile goods, and about a third would set aside money in preparation for possible price hikes, report University of Texas’s Olivier Coibion, University of California at Berkeley’s Yuriy Gorodnichenko, and Chicago Booth’s Michael Weber. Consumers’ responses also reflected a partisan divide in expectations about who will be most burdened by any higher costs: themselves or foreign producers, the researchers report.
Coibion, Gorodnichenko, and Weber collected the data to find out how consumers view Trump’s promised taxes on imports. Their survey, fielded through NielsenIQ, yielded about 13,500 responses, making it larger than standard opinion surveys, the researchers note.
“Ever since World War II, the key development in trade policy has been the very gradual but persistent reduction in trade barriers, interrupted only by brief spats among major trading partners,” they write. But with Trump’s inauguration, “the largest economy in the world is slated to start imposing large tariffs on its most important trading partners, a policy decision that will almost certainly lead to reprisals and may drive a surge in trade protectionism around the world.”
Consumers, they find, tend to expect Trump to follow through on his promise to levy tariffs on US trading partners—and, in fact, expect some tariffs to be higher than he has threatened. On average, survey respondents predicted the new administration would impose tariffs of 35 percent on Canada, 35 percent on European countries, and 42 percent on Mexico. “But the largest expected tariff by far is for China, with Americans predicting the Trump administration will apply a 50% tariff on average,” the researchers write.
When asked to make predictions about a hypothetical 20 percent tariff, Democratic respondents said that US consumers would pick up two-thirds of the price tag, whereas Republican respondents said that consumers would pay about 40 percent—and that foreign producers would pay almost as much. Democrats opposed tariffs, and Republicans supported them. On a scale of one to seven, with seven being the most supportive of tariffs, Democrats gave Trump’s expected tariff policy a 2.1 level of support, on average, while Republicans gave it a five.
Protectionist policies discourage innovation by domestic companies, and thereby hamper growth.
How Protectionism Poisons InnovationIt’s generally accepted in economics that tariffs make both imports and domestically produced goods more expensive, and respondents tended to agree. On average, they expected prices on imported products to rise 10 percent in the next year and those on domestically produced goods to jump 14 percent. They said that the tariffs would be good for US production, with Democrats predicting a slightly larger boost than Republicans.
Both groups also agreed that tariffs would drive up inflation—and reported being likely to take steps to mitigate the pain. Over 40 percent of respondents, including close to a third of Republicans, said they were likely to stockpile goods before tariffs hit. And more than a third of respondents, including both Democrats and Republicans, said they were likely to try to squirrel away money due to higher price uncertainty.
Because respondents included more than 2,500 company managers, the survey also provided a window into the behavior of businesses. Only 17 percent of managers said that tariffs would make their companies more likely to stockpile imports, and 23 percent said they were actually less likely than before to do so. Moreover, managers weren’t taking precautionary measures to protect their business liquidity.
Instead, managers said their companies would probably respond to tariffs by raising prices, changing the mix of products they sell, and looking for alternative suppliers as a way of minimizing disruption.
Managers exhibited less of a partisan divide than consumers did. “It appears that the need to maximize profits may dampen some of the ideological impetus that otherwise motivates beliefs and behaviors,” the researchers write.
Coibion, Gorodnichenko, and Weber note that while the survey asked about expectations, it’s likely that consumers are already stockpiling goods and companies are already raising prices. “This suggests that the inflationary consequences of the tariffs will manifest themselves even before the tariffs are put in place, further complicating the Federal Reserve’s job of bringing inflation back down to its target,” they write.
Olivier Coibion, Yuriy Gorodnichenko, and Michael Weber, “The Upcoming Trump Tariffs: What Americans Expect and How They Are Responding,” Working paper, January 2025.
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