Christmas shopping season temporarily escapes a disaster? UBS: Trump's delay of tariffs may postpone price shocks until 2026
U.S. President Trump has postponed the tariff increase to August 1, and UBS Chief Economist Paul Donovan stated that this could delay the impact on prices during the Christmas holiday until 2026. Although the tariffs will raise inflation, early orders by retailers may mitigate the impact on consumers. Donovan warned that the eventual tariffs will impose a heavy burden on American households, real wages will decline, and consumers may rely on credit cards and savings, cutting back on spending
According to the Zhitong Finance APP, UBS Group AG's chief economist Paul Donovan stated that U.S. President Donald Trump has postponed the implementation of new tariffs to August 1, which may delay the impact of the Christmas holiday on prices until 2026.
Donovan noted that the 10% tariffs affecting all trade will drive up inflation in July and August, but the additional tariffs imposed by Trump on specific countries may not affect shoppers until much later.
Donovan stated, "Once the goods arrive in the U.S., the entire supply chain is completed, as many retailers are clearly ordering products in advance for Christmas. This will obviously mitigate some of the damage to American consumers in the second half of the year."
Trump announced new tariffs to take effect on August 1.
However, Donovan warned that ultimately, any delay cannot prevent the comprehensive impact of tariffs on American households.
He stated, "This will impose a heavy tax burden on American consumers. By the end of this year, real wages adjusted for inflation will decline rather than rise, and by then, we will start to see some issues truly emerge."
Donovan painted a scenario where consumers initially rely on credit cards and savings, then cut back on spending. Meanwhile, the speed and extent of the inflation impact may depend on how much retailers seek to profit from the anticipated price increases related to tariffs.
But the situation could still change, especially regarding whether the White House sticks to its policies.
Donovan stated, "We must assume that Trump will back down, as that is his style. I think when you start hearing the cries of pain from American businesses and consumers, you will begin to see Trump make concessions on certain issues."
