Trump's tariffs hit American families hard! Procter & Gamble is the first to raise prices by 5%, and the billion-dollar cost will eventually be passed on to consumers.

The import tariff policy of U.S. President Trump is having a substantial impact on American consumers. With Procter & Gamble (P&G) announcing a 5% price increase on about 25% of its products in the U.S. market starting next week, more price hikes for everyday consumer goods are imminent. Although the U.S. stock market is rising due to technology stocks, the share prices of essential consumer goods giants Procter & Gamble, Nestlé, and Kimberly-Clark have plummeted by 7%-20% since the tariff announcement on April "Liberation Day", significantly underperforming the broader market. Retailers and manufacturers generally warn that if the surging import costs are not passed on, profits will be severely eroded. According to Reuters' estimates, the new tariff costs for companies in mid to late July could reach $7.1-8.3 billion, and economists warn that inflationary pressures will fully manifest after inventory runs out (by the end of 2025 or early 2026).

Giant Alert: Procter & Gamble Fires the First Shot in Price Increase American consumers have begun to feel the direct pressure brought by President Trump's import tariff policy. According to Reuters, consumer goods giant Procter & Gamble (P&G), which owns well-known brands like Pampers diapers and Tide laundry detergent, issued a memo to major retailers like Walmart this Tuesday, clearly stating that it will raise prices by about 5% on approximately 25% of its products in the U.S. market starting next week. This paints a grim picture for the U.S. consumer market in 2025.

Corporate Dilemma: Passing on Costs Becomes the Only Option In recent months, retailers and manufacturers have continuously warned that new tariffs on foreign goods will squeeze their profit margins unless they pass the costs onto end consumers. Procter & Gamble explicitly stated in a memo that tariffs are the core driving factor behind this price increase.

Stock price divergence: The consumer staples sector significantly underperformed the market Despite the significant pump in major U.S. stock indices (especially driven by tech stocks), many essential consumer goods companies have shown lackluster stock performance. Since the announcement of the "Liberation Day" tariff policy on April 2:

• Procter & Gamble's stock price big dump by about 19%
• Nestlé fall 20%
• Kimberly-Clark fell by 11%
• Pepsi has fallen nearly 7% At the same time, the S&P 500 index has risen by about 13%, highlighting the precise impact of tariff policies on this sector.

Consumer Downgrade: Consumers Turn to Affordable Alternatives The food and beverage manufacturing business performance is weak, reflecting that budget-conscious consumers are avoiding expensive name brands. Nestlé recently observed that North American consumers are still unwilling to pay extra at checkout. Any further price increases could exacerbate investors' concerns: how will these household name brands balance cost-sensitive consumers with rising import costs?

Retail giants cannot escape the pressure of rising prices "You will see companies like Walmart, Amazon, and Best Buy forced to pass price increases onto consumers," said Bill George, former CEO of Medtronic and a researcher at Harvard Business School. He further warned, "The general public has not yet seen the full impact of the increased tariffs, and the situation will get worse."

Hundreds of billions in tariff costs weigh heavily, and companies are showcasing their ingenuity The Reuters tariff tracker estimates that between July 16 and 25, U.S. companies may collectively bear an additional tariff cost of approximately $7.1 billion to $8.3 billion this year.

• Automakers Under Pressure: Automakers such as General Motors and Ford have absorbed billions of dollars in costs on their own.
• Stock up in advance: Other industries choose to ship in advance to lock in the pre-tariff rates and secure a time window for future price increases.
• Inventory Depletion Crisis: Economists warn that once these inventories are depleted (possibly by the end of 2025 or early 2026), consumers will feel the impact in official inflation data.

Differences in Tariff Pass-Through Between Luxury Goods and Ordinary Products Not all enterprises face the same price resistance:

• Ray-Ban Manufacturer Raises Prices: Ray-Ban sunglasses manufacturer EssilorLuxottica has implemented a rise in prices.
• Swatch rises 5% demand unchanged: Swiss watchmaker Swatch increased its suggested retail price by about 5% following tariff news in April. Its CEO Nick Hayek told Reuters that this adjustment hardly affected demand, noting that luxury watch buyers are less sensitive to cost and often take advantage of lower tax rates overseas when purchasing. "Cars or heavy machinery cannot do this, but watches can," Hayek said.

The global tariff matrix takes shape, U.S. households indirectly face reduced income According to the current arrangement:

• The EU will impose a uniform 15% tariff on imported goods.
• Japanese goods face the same tax rate.
• A 10% tariff is currently imposed on UK export goods.
• Next, countries that have not reached bilateral agreements, including Brazil, Canada, and South Korea, will face higher tax rates.
• All other imported goods maintain a baseline tariff of 10%, but the White House is considering raising it to around 15%.

Data from the Yale University Budget Lab shows that these measures have raised the average import tariff in the United States to 18.2%, the highest level in a century.

Government revenue surges, people's wallets shrink The U.S. government insists that additional tariff revenue will inject "trillions of dollars" into the federal treasury. Tariff revenue so far this year is hundreds of billions of dollars higher than in the same period of 2024. However, the reality is that after importers pay tariffs at the border, these additional costs are passed through the distribution network, ultimately borne by retailers and consumers.

Researchers at Yale University estimate that these tariffs have led to a nearly 1.8% rise in consumer prices in the United States, equivalent to an effective income reduction of about $2,400 per household. With inflation rising in June, companies that had previously maintained stable prices are now signaling widespread price increases.

Conclusion: The cost transmission chain of Trump's tariff policy is becoming increasingly clear, from Procter & Gamble's first price increase to the big dump in stock prices of essential consumer goods, all of which foreshadow a more severe inflation test for American households. Although some luxury goods are temporarily immune due to their consumer demographic characteristics, the price increase wave for mass consumer goods related to people's livelihoods is likely unavoidable. Economists warn of concentrated inflationary pressures being released after inventory depletion, combined with the government's consideration of issuing "tariff rebate checks" as a political maneuver, highlighting the profound impact of policy on the lives of ordinary citizens and the potential political risks. In the coming months, American consumers' wallets will continue to feel the pressure, and how businesses balance costs with market demand will become a key challenge.