Pandemic déjà vu: Fears of higher tariffs are leading some to stockpile goods
New York
CNN
—
It's not March 2020, but it sure feels a lot like it for Herschel Wilson.
Wilson started building up a small stockpile of essential goods for his three pets and family of five based in Tacoma, Washington, in August, after Donald Trump had been named the Republican presidential nominee, with an economic agenda that called for higher tariffs.
Once Trump won the election, "that changed everything again, and I started to stockpile pretty much everything," Wilson told CNN. That includes canned goods, bottled water and, yes, lots and lots of rolls of toilet paper. So far, he estimates he's spent $300 on stockpiling goods since the election. Going forward, he said he plans to spend $100 extra each month on top of regular grocery spending.
Unlike the onset of the pandemic, when Wilson was also drawn to stockpiling, this time around his chief concern isn't necessarily that he won't be able to find these goods. Rather, it's his belief that they'll cost him a lot more if President-elect Trump follows through with the tariff threats he's made.
Herschel Wilson owns a pottery painting studio with his wife, Noelle, pictured. The pieces they buy are mainly imported from countries like China, making their business sensitive to the effects of potentially higher tariffs.
Courtesy Herschel Wilson
From dog food to paper towels, Herschel Wilson is building a stockpile of nonperishable goods for his family of five and three pets.
Courtesy Herschel Wilson
Among those is a 10% to 20% tariff on all goods imported into the US, a 60% or more tariff on goods from China and a 25% across-the-board tariff on imports from Mexico and Canada.
Many trade experts and economists are skeptical that Trump will impose all the tariffs he's pledged to and, instead, could use them as a negotiating tactic. That could mean that certain goods end up being excluded from tariffs, as was the case with tariffs Trump imposed during his first term. There's also the possibility that Trump backs off on imposing new tariffs on some nations' imports altogether.
New tariffs could make iPhones more expensive.
Frederic J. Brown/AFP/Getty Images/File
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Nevertheless, the tariffs he's floated have the potential to significantly increase the prices consumers pay on nearly everything that isn't made entirely in the US, of which there are very few goods.
Wilson is in tune with this, especially as a small business owner. He and his wife operate Painting Panda Pottery Studio, where customers paint their own pottery, including mugs and plates. They often purchase the unpainted pottery pieces through US-based sellers. But ultimately the goods come from China and other countries, he said. "I know that if there are tariffs, then we're going to have to pass that on to our customers," he told CNN, meaning that he would need to charge higher prices
‘Robbing Peter to pay Paul': The risks of stockpiling
Scott Lincicome, vice president of general economics and trade at the Cato Institute, discourages individual consumers from stockpiling goods. "We certainly don't know if we're really getting this global tariff thing, and certainly not on day one," he said, referring to Trump imposing tariffs on all imported goods when he takes office on January 20. Trump has vowed to impose higher tariffs on Mexico, Canada and China on day one of his presidency. So, stockpiling to try to save money down the road could be "preparing for something that never happens," he said.
Moreover, as witnessed during the pandemic, "stockpiling by consumers can actually lead to higher prices in and of themselves and empty store shelves," Lincicome said. Plus, any money put toward stockpiling means consumers have less to spend in other areas.
Gaylon Alcaraz understands that she's taking a gamble stockpiling goods, especially with more than $200,000 in student loan debt she's accumulated from getting her PhD and helping cover college tuition for two of her kids.
Gaylon Alcaraz is extremely worried about having to pay more for household necessities if President-elect Donald Trump follows through with tariff threats he's made. That's prompted her to stockpile essential household goods that she stores in her garage.
Courtesy Gaylon Alcaraz
But concerns about having to potentially pay a lot more for goods in the future due to higher tariffs pushed her and her mom, whom she helps support financially, to stock up on goods after the election.
"When I logically think about it, sometimes it feels like it's irrational, but I just remember how hard it was during the pandemic when we couldn't find certain things and when we found them, they were really expensive," Alcaraz, a Chicago resident who works as an executive director of a nonprofit organization, told CNN.
"If we don't need it, it's fine. We'll just still have it," Alcaraz, who lives alone, said. "Every time we see stuff on sale, every time we get paid, we say, ‘Let's just stock up on stuff that we had a hard time finding before, or it was just really expensive.'"
That's included infamous goods that saw extreme shortages from panic buying during the pandemic, such as toilet paper, Lysol wipes, paper towels and other kinds of cleaning supplies. But when it comes to stockpiling food, "that's just a little bit too overboard for me."
Ultimately, stockpiling feels like she's "robbing Peter to pay Paul," she said, given her debt burden on top of all her immediate living expenses.
Companies are being proactive, too
It's not just individuals trying to get ahead of potentially higher tariffs, large companies are too.
For instance, Stanley Black & Decker CFO Patrick Hallinan said at the company's investor day last month that it's investing in building up higher inventory levels "for a number of reasons, not the least of which is tariffs." The aim in doing so is to limit how much the company may need to raise prices on goods if tariffs go up as they're expecting, he said.
During Trump's first term, when higher tariffs were levied on Chinese goods, "we were not proactive in pricing," he said. "The learning from that is we are going to be proactive in pricing going forward."
In an aerial view, shipping containers are stacked on a dock at the Port of Oakland on December 09, 2024 in Oakland, California. U.S. President-elect Donald Trump is threatening new tariffs on multiple countries as his second term approaches, after making tariffs a signature of his 2024 presidential campaign.
Justin Sullivan/Getty Images
Additionally, US manufacturers, particularly those in the consumer goods sector, have recently "increased their safety stocks to help blunt any immediate tariff increases," John Piatek, vice president at GEP, a supply chain consulting firm, said in a statement included in a monthly report surveying 27,000 businesses worldwide by GEP and S&P Market Intelligence.
Buying activity of imported goods across North American manufacturers hit its highest level in over a year last month, according to the report.
Another approach companies are following is working on contingency plans for when there's more certainty on what new potential tariffs will go into effect, according to recent company earnings calls. These plans, in some cases, involve expediting shipments out of countries expected to see higher costs and relocating some production.
The steps that bigger businesses are taking, or plan to take, can ultimately lessen the blow consumers face from possibly higher tariffs, Lincicome said.
On the off chance higher tariffs don't happen, Wilson, a father of three kids under 13, said none of the goods he's purchased will go to waste. "My kids eat a lot, so I don't want to pay double the price of what I'm paying right now or even 20% more," he told CNN. "I know that the stuff that I have now is not going to last for four years, obviously. And that's not the intent. It's really to kind of take some of the steam off of the expense later."
