U.S. Consumers Feel the Burden of Tariffs as Costs Rise and Spending Decreases

U.S. Consumers Feel the Weight of Tariffs

A recent survey conducted by L.E.K. Consulting has revealed a concerning trend among American consumers regarding the impact of tariffs on their spending behavior and financial outlook. As prices for various goods continue to rise, consumers feel that they are unfairly bearing these costs, leading many to adjust their purchasing habits significantly.

Overview of the Survey Findings

The survey, which gathered responses from approximately 2,000 U.S. adults, paints a striking picture of the current economic sentiment among American consumers. Approximately 68% expressed that they feel they are personally incurring the costs associated with tariffs. This sentiment is reflected in their views on acceptable price points for numerous products. For instance, 61% of participants reported that they find the prices of major household goods to be unacceptable. Similarly, 57% felt this way regarding apparel, footwear, and vehicle-related products. The data indicates that consumers across various categories are feeling the financial strain, with nearly half expressing dissatisfaction over prices in categories like beauty products and groceries.

The Financial Strain on Consumers

The implications of rising prices are significant, with a striking 74% of consumers indicating plans to reduce their expenditures on apparel and accessories. Additionally, 68% mentioned they would cut back on major household goods, 63% on beauty products, and 50% on automobiles and related items. As disposable income appears constrained, many consumers are not expecting improvements in their financial situations anytime soon, with only about 26% believing their circumstances will enhance over the next year.

Changing Spending Habits

Interestingly, the survey highlighted a tendency for consumers to adapt by trading down to lower-priced alternatives rather than simply reducing overall purchases. A considerable 83% of respondents intend to buy cheaper durable household brands, while 60% plan to seek out lower-cost clothing options. This shift in behavior signals a strategic pivot among consumers aiming to maintain their purchasing power in the face of rising costs.

Laura Brookhiser, Managing Director at L.E.K. Consulting, notes the significance of these findings. According to her, "Consumers plan to navigate high prices and cut spending by trading down to lower-priced brands in various categories. This is a phenomenon that consumer companies should monitor closely."

Recommendations for Brands

In response to these challenging market conditions, brands and retailers are confronted with the critical task of reassessing their pricing strategies. The most effective companies will focus on setting their prices in alignment with the perceived value consumers experience, rather than simply applying traditional price mark-ups. Understanding the core qualities that define the value proposition of a brand is essential; this approach will help maintain profit margins in areas where genuine differentiation exists, such as sustainability initiatives or unique product collaborations.

Rob Haslehurst, another Managing Director at L.E.K. Consulting, emphasizes that a demand-driven approach will empower brands to adjust their pricing flexibly across different sales channels and customer segments. With apparel being identified as the most price-sensitive category, many brands are ramping up promotional activities to sustain their sales despite the rising costs associated with tariffs.

Conclusion

The findings of this survey present a vital look into the attitudes of American consumers amid an increasingly challenging economic landscape. As they adjust their spending habits to accommodate rising prices, it is clear that brands must evaluate and adapt their pricing strategies proactively to cater to consumers’ changing needs. The ability to understand and respond to these shifts may define the success of many consumer brands in the market today.

Methodology: The pulse survey was conducted in the summer of 2025 with a nationally representative, demographically balanced sample of around 2,000 U.S. adults to gain insights into their evolving perspectives on tariffs and pricing.

About L.E.K. Consulting: With a global footprint since 1983, L.E.K. Consulting partners with leaders across various industries to navigate challenges, seize opportunities, and drive growth. For further information, visit www.lek.com.