Tariffs Force Retailers to Fess Up About Why Things Cost More

A new study from PYMNTS Intelligence and Visa Acceptance Solutions, the May 2025 “Consumer Tariff Sentiment” report reveals that nearly half of U.S. shoppers now expect tariffs to raise prices at double the current inflation rate. And how they respond to that expectation, the findings show, depends not only on their wallets but on their worldview.

The study identifies three broad personas: value-first shoppers, buy-American advocates, and the indifferent middle consumer.

Nearly 4 in 10 consumers surveyed (39%) identify as value-first shoppers. These consumers are focused on price. They’re trading down, cutting nonessentials, and swapping name brands for generics. For them, tariffs are a cost burden, and that’s the end of the story.

Around one-third of consumers (34%) report that they support tariffs as a way to protect domestic jobs and industry. They are willing to pay more for U.S.-made goods and can often see their spending as a political act.

Rounding out the bunch, more than 1 in 4 shoppers (27%) say they are “indifferent.” This cohort tends to be less informed, less engaged and less reactive. They’re more influenced by convenience, design and digital accessibility than by price tags or product origin.

So, what’s the big deal for retail? The fact of the matter is that these aren’t just economic categories. They’re cultural, reflecting the manner in which purchasing decisions are made against a backdrop of values-based consumption.

And while large retailers have the agility to navigate this new landscape, smaller businesses may struggle.

A retailer seen as complicit in passing costs along; or on the other hand outsourcing to avoid tariffs; could inadvertently alienate either side of the consumer divide.

Trade Policy Meets Checkout

Tariffs were once the domain of economists and trade attorneys, not weekend shoppers. But over the past few months, that has changed.

The PYMNTS Intelligence data found that more than 8 in 10 consumers are taking steps to offset the financial impact of tariffs on their pocketbooks. In fact, the average individual is making nearly five such behavioral changes, and 44% of consumers have already changed their shopping habits in response to tariff-induced price pressures.

Retailers are reacting in several ways, per the report. Major grocers, for example, are experimenting with “good, better, best” product tiers, offering both premium domestic products and lower-priced imports in the same category.

At the same time, direct-to-consumer brands like Everlane and Rothy’s are leaning harder into origin transparency, hoping to reassure buyers about the cost-value proposition of local manufacturing.

Meanwhile, sophisticated retailers are using AI to segment customers not just by purchase history but by values alignment, delivering personalized offers based on a shopper’s inferred beliefs about sustainability, nationalism or price sensitivity.

Read the report: Shoppers Pull Back as Half of US Consumers Expect Tariffs to Raise Prices at Double the Rate of Inflation 

So, what’s next for brands caught in the crossfire between policy and the point of sale?

First of all, mass marketing may no longer be viable. Brands are under pressure to know their customers intimately and serve distinct messaging to each subgroup. That means using customer relationship management systems, loyalty programs, and AI to decode not just what people buy, but what they believe.

Separately, the current tariffs may shift. When that happens, sentiment will shift. Retailers must be able to pivot sourcing and logistics quickly, without losing brand integrity. “Just in time” needs to become “just in case.”

The most lasting impact of tariffs may not be on prices but on expectations. Consumers now expect brands to have a point of view. To explain where their products come from. To be honest about trade-offs. And to reflect their values back to them at the register.