Consumers are worried about the impact of tariffs on their finances — and it’s affecting their shopping habits.
The Conference Board’s index of consumer sentiment fell for a third-straight month in February, while University of Michigan’s measure of consumer sentiment slid nearly 10% from January.
Four in 5 consumers say they are concerned about the impact of tariffs on their finances or shopping, a Numerator survey found last month. Three-quarters expect to change their shopping habits.
Within the past week, President Donald Trump enacted tariffs on Mexico, Canada and China, though he later paused tariffs on goods from Mexico and Canada that fall under the U.S.-Mexico-Canada Agreement. Previously, both Canada and China responded with tariffs of their own on U.S. goods, while Mexico said it would announce its countermeasures soon.
As the tariffs take effect, prices are expected to rise, causing customers to rethink their spending. Businesses will be looking to maintain loyalty amid changing consumer behavior.
Two in five customers anticipate looking for sales or coupons to offset higher prices, and nearly one-third anticipate buying fewer imported goods, according to the Numerator survey.
But not every company will be able to slash prices. Mario Matulich, president of Customer Management Practice, says businesses will need to maintain and invest in experience to keep customers.
“Customers will pay more for great customer experience. It's been proven time and time again that all of us will pay a little bit more if the quality of the experiences is there,” Matulich said. Customers are “prioritizing how personalized experience, how seamless experience is being delivered, how effortless experience is being delivered.”
While some organizations may be tempted to cut customer service for cost savings, such actions may well backfire, Matulich said.
“When you see organizations that have failed to deliver a high-end customer experience, and now prices are going up so they have a high-priced average experience or below average experience, those are the organizations I'd be sitting around boardroom right now saying, ‘Listen, what are we going to do?’”
While it’s unclear whether the current tariffs are being used as a negotiating tool or will remain in effect long term, Matulich urges business leaders to consider how to maintain CX as their primary differentiator.
“Those that are able to do that are going to win,” he said. “They're going to continue to keep customers loyal. They are going to win market share.”
