‘Trump tariff’ surcharges coming to customer bills
By Spencer Soper and Lily Meier | Bloomberg
Companies are slapping “Trump tariff” surcharges on customers’ bills in a bid to signal where price hikes are coming from, a marketing gimmick that could help some niche brands cash in on the politically charged moment.
Such finger-pointing fees would inevitably alienate some customers, which is why the surcharges aren’t expected to be prominent features of post-tariff shopping. Still, some business owners say it’s better to tell shoppers directly why the cost of their goods are rising.
“We think transparency is the way to go here and I am giving Trump full credit for his decision to add this tariff to all US consumers,” Ryan Babenzien said when he announced his plan for Jolie Skin Co., which makes filtered-water showerheads.
Jolie will impose a “Trump Liberation Tariff” surcharge starting next week, Babenzien said. His company is still calculating what the fee will be on top of the cost of a $150 showerhead. His team is building software in-house to add the fee to products purchased on its website, which runs on Shopify Inc.’s platform.
Online forums are already teeming with advice on how business owners logistically can add tariff fees to their websites, and even suggesting that Shopify, a platform that hosts more than 5 million online storefronts, should include such a tool in its basic package. Shopify doesn’t currently offer such a line-item tool, but its clients can still customize their websites by hiring programmers or purchasing separate applications.
Disclosing surcharges is one way for businesses to show consumers that what they charge for products isn’t entirely within their control, especially when there are big spikes for routine costs like fuel and transportation. Some restaurants added surcharges to menu items when egg prices spiked earlier this year.
President Donald Trump’s trade war continues to rattle global markets, despite a 90-day reprieve on levies proposed for most countries. China remains a target as it faces tariffs of as much as 145%.
Big retailers and brands are busy negotiating how to absorb the added costs throughout their supply chains, but smaller businesses may have no other option than to raise prices. And those with edgier brands and close relationships with shoppers might embrace the idea of getting real with their customers, EMarketer, Inc. analyst Sky Canaves said.
“They can speak out more openly on the impact of tariffs to their businesses and direct cost to consumers,” she said. “Given all the uncertainty around tariffs and worries about when and by how much prices will go up, shoppers could welcome the transparency of line item tariff surcharges, and they’ll become normalized as more brands adopt them.”
A Trump tariff surcharge will mostly appeal to businesses with smaller product lineups and whose customers usually buy just one or two items, said Jarrad Berman, partner at the New York private equity firm TZP Group, which has 17 consumer brands in its portfolio. Shoppers will likely only tolerate a surcharge of less than $10, but if it starts adding up across multiple items in a bigger shopping basket, you’ll scare customers away, he said.
“Everyone is discussing tariff surcharges,” said Berman, whose portfolio includes SAXX underwear and Zimba teeth-whitening strips. “It’s just not one size fits all.”
Dame added a $5 “Trump Tariff Surcharge” to some of its sex toys, which retail from $45 to $140, earlier this week. The company imports them from China and couldn’t reduce its manufacturing prices enough to cover the steep tariff increase, CEO and co-founder Alexandra Fine said.
The business, which also runs its website on Shopify, couldn’t add the surcharge as a percentage so instead tacked on a flat fee for each purchase. Fine said she’s separately negotiating with retailers like Walmart and Target about increasing prices of Dame products.
It was less about covering the cost of the tariffs, she said, “and more about an expression of frustration and wanting to put it on the receipt.”