• Retail analysts and trade groups are warning President-elect Donald Trump's proposed tariff policy could lead to higher prices for consumers.
• Companies like Five Below, Crocs, Skechers, Amer Sports and American Eagle Outfitters could be forced to raise prices or take profit cuts because of their exposure to China.
• The CEO of E.l.f. Beauty told CNBC it could raise prices under the proposed hikes, which are far higher than the tariffs Trump imposed during his first presidency.

For retailers and consumers finally feeling some relief from inflation, President-elect Donald Trump's tariffs proposal introduces fresh uncertainty around how prices could change during his presidency, analysts said Wednesday.

Trump, who NBC News projects won a second term in a decisive victory, said during his presidential campaign that he would impose a 10% to 20% tariff on all imports, including tariffs as high as 60% to 100% for goods from China.

Companies, retail trade groups and industry analysts have warned the move could fuel higher prices on a wide range of Americans' purchases such as sneakers and party supplies.

"The adoption of across-the-board tariffs on consumer goods and other non-strategic imports amounts to a tax on American families," National Retail Federation CEO Matthew Shay said in a statement Wednesday. "It will drive inflation and price increases and will result in job losses."

Earlier this week, the NRF released a study on the impact of Trump's proposed tariff increases and said they would lead to "dramatic" double-digit-percentage price spikes in nearly all six retail categories that the trade group examines. Those categories are apparel, footwear, furniture, household appliances, travel goods, and toys.

The cost of clothing, for example, could rise between 12.5% and 20.6%, the analysis found.

The CEO of E.l.f. Beauty, which primarily relies on China to manufacture its beauty products, told CNBC in a Wednesday interview it could be forced to raise prices if the proposed tariff hikes take effect. 

"We do have pricing power. If we saw we needed to leverage pricing, we would," said E.l.f. CEO Tarang Amin. "It will depend on what we see in terms of the tariffs. It depends on the magnitude of the tariffs."

In a research note Wednesday, GlobalData managing director Neil Saunders said tariff hikes would "create an enormous headache" for retailers, which are likely to pass those costs on to consumers. The result is likely to be softer spending from already price-conscious shoppers.

"Despite Trump's assertions to the contrary, tariffs are paid by the companies or entities importing goods and not by the countries themselves. This means the cost of buying products from overseas, whether directly or as an input for manufacturing, would rise sharply," said Saunders. 

"Given the trade between Chinese manufacturers and US retailers, a strict tariff policy would mean retailers initially either taking a massive hit on profits or being forced to put up prices, which would fuel inflation and dampen retail volume growth," he said.

Over time, supply chains would adjust to this change in tariff policy but it would be "incredibly disruptive" in the short term, said Saunders.

"The small hope is that the tough talk on tariffs is more of a negotiating ploy and that what is finally implemented will be relatively modest in scope," he said.

Companies most exposed to tariff hikes

Whether a retailer will suffer from proposed tariff increases will vary based on where their goods come from and whether they have the pricing power and popularity to drive higher profit margins or raise prices.

In a Bank of America research note, retail analyst Lorraine Hutchinson said Five Below, Crocs, Skechers, Amer Sports and American Eagle Outfitters are at higher risk, because 20% or more of their goods are sourced from China. As a result, she downgraded her rating on Five Below stock from neutral to underperform, saying the company doesn't have "the pricing power to mitigate hefty tariffs."

On the other hand, companies like Bath & Body Works — which sources about 85% of its products from North America — would be less vulnerable, Hutchinson said.

She said Trump-backed corporate tax cuts could benefit retailers, but high tariffs would outweigh those tax savings.

Deep discounters, such as Dollar Tree, are also exposed because their fixed-price-point business model makes it difficult to pass on higher prices to customers, said Peter Keith, a senior research analyst at Piper Sandler. The store, which sells discretionary items like toys and party hats, imports many of its items from China and has set prices of $1.25. That means the company needs to either absorb higher costs or shake up its price point model altogether, he said.

Bank of America also downgraded Yeti Holdings from buy to neutral because of its high exposure to China. However, unlike Dollar Tree, its fan following and higher profit margin may give it enough cushion to absorb cost increases or raise prices.

Yeti's 20-ounce tumblers typically cost $35, but the company has an approximately 60% margin on the item, Piper Sandler's Keith noted.

Plus, Yeti and other companies have already been working to diversify their supply chains and move manufacturing outside of China so they're less reliant on the region and its risks. By the end of 2025, Yeti has pledged to move about half of its production to regions outside of China.

E.l.f. has taken a similar approach, said CEO Amin. 

"Back in 2019 when 25% tariffs came in, almost 100% of our production was in China," said Amin, referring to tariff hikes Trump imposed during his first presidency. "We've been diversifying, so we've got supply in other parts of Asia, in the U.S., in Europe. So less than 80% of our supply is out of China now, and I would expect it to be a little bit less going forward." 

Part of E.l.f.'s value proposition is its ability to offer prestige products at a discount, but Amin said he's not worried about consumers trading down if the company ends up raising prices. He pointed to its popular lip oil, priced at $8, and its closest equivalent: Dior's Lip Glow Oil, which is priced at $40. 

"I even told our group, like, why did we price it at $8? We should have priced it at $10," said Amin. "So maybe I'll get my chance now, but we'll see." 

More sticker shock?

For consumers, tariffs could contribute to more sticker shock on a wide variety of purchases — from car repairs to toys — just as inflation cools. Some companies, including AutoZone, have already told investors that they will raise prices to cover the additional costs. 

"If we get tariffs, we will pass those tariff costs back to the consumer," AutoZone CEO Philip Daniele said on an earnings call in late September. He said the company typically hikes prices ahead of tariffs going into effect.

Customers could also pay more for a six-pack of beer, a bottle of Scotch, or even a pack of Oreos, thanks to tariffs.

Analysts from equity research firm TD Cowen pointed to a few at-risk companies, including Constellation Brands, which makes its beers Corona Extra and Modelo Especial; liquor company Diageo, which imports tequila from Mexico and Scotch from Scotland; and Mondelez, which makes some of its cookies and snacks in Mexico.

Shoes for adults and kids would cost more, too, if Trump's proposed tariffs go into effect, said Matt Priest, CEO of Footwear Distributors and Retailers of America, a trade group that counts Nike, Walmart and others as members.

About 99% of all footwear sold in the U.S. is made overseas, he said, and it would be difficult to move a meaningful chunk of that production back to the States, even if a cost penalty is tacked on.

"Count us skeptical that there's a pathway for us to figure out how to make two and a half billion pairs of shoes in the U.S. every year," he said.

"The rate of inflation is declining," he said. "It would be counterproductive to then turn around and go back to pulling one of those inflationary levers, which would be additional tariffs, at a time when the consumer's telling all of us, both politically on last night's results, as well as from a consumer perspective: 'We don't want higher prices.'"