Consumers Rush To Make Pricey Purchases

Would you pay $2,300 for an iPhone?

U.S. consumers have been increasingly motivated to make expensive purchases ahead of anticipated price hikes driven by President Donald Trump’s “Liberation Day” tariffs, which were enacted via an executive order on Wednesday. These tariffs, set to impose a 10% levy on imports from all countries starting Saturday, followed by higher reciprocal tariffs on nations with significant U.S. trade deficits beginning April 9, 2025, have sparked a rush to buy big-ticket items before costs rise.

This consumer behavior is particularly evident in the automotive sector. In the first quarter of 2025, U.S. auto sales surged, with buyers snapping up pickup trucks, SUVs, and other vehicles. The looming tariffs, expected to increase vehicle prices by thousands of dollars due to their reliance on imported parts and materials, have driven this preemptive spending. Consumers are acting on expert advice to purchase now rather than face steeper prices later, a sentiment echoed across various industries reliant on overseas manufacturing.

The rush to make purchases

The tariff − the highest U.S. tariff on any country − is raising the specter of steep price hikes on goods imported from China, including Apple iPhones.

Most of the 200 million iPhones Apple produces each year are made in China. Of the consumer goods affected by the 54% tariff, iPhones could take the biggest hit from the sharp hike. 

Apple, which commands high profit margins, would have to either absorb the costs and pass them onto investors or raise prices and pass them on to consumers. If Apple were to do the latter, consumers could see prices jump as much as 43%, analysts estimated Thursday. 

Even the cheapest new iPhone – the iPhone 16e – would see a big jump in price from $600 to $858 – a risky strategy when inflation-weary consumers are reeling from high prices and cutting back on pricey purchases. 

Some consumers are “doom spending”. The current wave of pricey purchases reflects a strategic move to beat tariff-induced inflation. However, not all are participating; many Americans, frustrated by prices already 19% above pre-pandemic levels as of early 2024, are trading down to cheaper alternatives or cutting back on non-essentials.