Like many, we watched President Trump’s Tariff announcements with horror yesterday.
Only last month the Stickybeak team was in the US at ExpoWest in Los Angeles with some great food and drinks companies who are already exporting into the US or were contemplating doing so.
For all of them, having 10% whacked on top of their price has big implications.
Will US consumers accept that extra cost?
Will they begin to discriminate against New Zealand (and Australian, Canadian and UK) products in favour of US equivalents?
Overnight we polled 1,000 US consumers to find out (as is usual with Stickybeak, we had answers in hours). A health warning; these questions were asked of US consumers of products from ‘foreign’ countries in general not of specific products so it is a little hard for the respondent to imagine how they will react on price so the results should be seen as directional only.
Nonetheless, here is what we learned:
Firstly, the overwhelming majority of US consumers say they do notice the country of origin of products they buy, so this is not an issue that non-US brands can hide from:
Of course, many products go out of their way to emphasise country of origin because it confers tangible or emotional brand benefits or supports the brand promise. This may now have less optimal impact.
A similar proportion, and again a strong majority, say they are clear or very clear about what a “tariff” is:
However, their support for tariffs varies depending on the country being targeted. That’s bad news for Chinese products because 45% of US consumers support the Chinese tariffs. Whatever the rest of us outside the US might think of his policy, Trump’s messaging on the need for tariffs is having an impact.
We asked the same question about products from New Zealand, Australia, the UK (all attracting the same 10% levy) and the good news is there is less support for the tariff (41% oppose it for the UK, 42% for New Zealand and 44% for Australia):
Interestingly, Canada which has been the focus of so much of President Trump’s narrative on Tariffs and which now attracts a whopping 25% levy has broadly similar numbers suggesting considerable (though not majority) sympathy for the northern neighbour:
America, like the rest of the world, has been suffering a cost of living crisis over the last couple of years with higher than normal inflation numbers (though this has decreased of late). Consequently, nearly half expect the tariffs to have a ‘significant’ or ‘very significant’ impact on their household budget.
And because of this, the very worrying thing for non-US brands and products is that over half of American consumers say they will now look for an American made substitute. Sometimes this is hard to do on product quality or function, and for food and drink products people will continue to put a premium on things like taste and purity but there will be some swapping for sure. So if there is one data point in this that President Trump would approve of, it is this!
But here is the big worry for exporters to the US; when confronted with the notion that goods from New Zealand could be up to 10% more expensive, only 28 per cent said it would make no difference and a staggering 72% said they would be less inclined to buy, including 10% who would not any longer buy at all.
Now it’s important to point out that this response is to a general statement and responses will vary hugely by category, price point and of course brand love, but the strong indication is that the US consumers will buy less. This depressing statistic is broadly the same for products from the Uk and from Australia.
Given all of this, our advice is NOT to react quickly but to see how sales and channels respond to the new tariffs and remember that ‘price’ is only one of the four P’s of marketing which still leaves product, place and promotion to be worked on.
Results dashboard here with lots more data in this issue.
And don’t forget Stickybeak is the world’s best platform for consumer testing everything from price to packaging to messaging to content.
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