Why Brands Should Treat Tariffs Like Sales Tax: A Call for Transparency
Consumers are awakening to a new economic reality: the cost of everyday items is rising. From hot sake to tinted moisturizer and even vehicles, inflation is becoming glaringly evident. However, for brand leaders—especially those in retail—this isn’t merely about rising prices; it’s fundamentally about trust. Trust can build or crumble in the intricate landscape of tariff trickle-down effects.
The Cost Dilemma: Absorb or Pass On?
Many brand leaders operate under the illusion that they can simply absorb rising costs without adjusting prices. This is wishful thinking. The harsh reality is that most companies will ultimately pass these costs onto consumers. When they do, a critical choice looms: Will they choose transparency or risk being perceived as opportunistic?
This choice is particularly significant, as tariff policies may seem abstract, yet their impact on pricing is undeniably tangible. Brands that lack proactive communication strategies risk appearing exploitative, especially when surrounded by a narrative suggesting that tariffs won’t reach consumers’ wallets. If the public suspects that companies are using tariffs as a pretext for raising prices and fattening margins, trust will erode, leading to a loss in long-term loyalty.
A Radical Idea: Treat Tariffs Like Sales Tax
Here’s a bold proposition: brands must disclose tariffs with the same level of clarity that they apply to sales tax.
Transparency Over Complexity
This doesn’t imply a need for a political position or a dull economics lecture at checkout. Rather, it’s about meeting consumer demands for an intuitive breakdown of pricing. Just as consumers are accustomed to seeing line items for shipping, service fees, and taxes, they can also learn to accept a “tariff fee” with the same neutrality. Remember, it’s not justification; it’s straightforward honesty.
The Marketing Opportunity
This is where creative marketers and agencies can shine brightly.
Think back to when Apple launched App Tracking Transparency. With a simple OS update, consumers gained the power to opt-out of being tracked. Brands and app developers had to make a rapid pivot, developing smart communication strategies that conveyed the value of tracking. The best campaigns didn’t just plead for users to click “Allow”; they told a compelling story about the value exchange, granting users control—all while maintaining brand voice. This wave of transparency didn’t weaken strong brands—it infused them with even more strength.
Embracing the Same Energy for Tariffs
Tariffs may feel like an entirely different beast, but the messaging opportunity remains unchanged. Brands must recognize that the challenge goes beyond merely explaining a price hike; it’s about reinforcing the brand-customer relationship during moments of potential friction. This could involve:
- Providing creative breakdowns of pricing structures.
- Offering interactive user experiences that allow consumers to select subscription tiers that incorporate or exclude tariff-affected products.
- Reimagining how value is articulated altogether.
The Key to Consumer Loyalty
The reality is that consumers are already judiciously filtering their choices based on what they are willing to pay more for. Premium categories and beloved brands may preserve loyalty through perceived value. For others, the burden of turbulence may be too great. It’s not merely about price; it’s about perceived honesty.
Taking the Initiative
Brands need to get ahead of the curve. Integrate tariff disclosures as a standard practice rather than a hesitant response. Present them with the same calm clarity you would for any other fee:
- Base price: $50
- Sales tax: $4
- Tariff impact: $3
No drama—just facts.
The Case Against Opacity
Some legacy brands may hesitate, fearing that revealing such pricing details disrupts a long-held taboo. However, in an era dominated by instant price comparisons, Reddit forums dissecting markups, and TikToks revealing product margins, opacity poses a far greater risk than transparency. Consumers are increasingly aware that changes are afoot. The crucial question is: Will you explain it before someone else does?
Harnessing Digital Platforms
Retailers and direct-to-consumer brands are uniquely positioned to lead this movement. Their digital platforms offer flexibility to test, communicate, and iterate. Furthermore, their customer bases—already attuned to price changes and value signals—crave brands that don’t treat them like they’re in the dark.
Transparency as a Loyalty Strategy
Transparency isn’t merely a defensive strategy; it’s a pathway to fostering loyalty, a critical piece of your marketing brief, and an invitation to simplify the complex.
Building the Narrative Now
Don’t sit back and wait for the backlash against tariffs to compel a response. Start building your narrative today. Engage your creative teams. Equip your agencies. Empower your brand to be the one consumers thank—not just for what you offer, but also for the honesty in how you deliver it.
In a landscape defined by scrutiny of costs and skepticism from consumers, transparency is the most undervalued currency we possess. Let’s not squander it.
Dustin Engel is the CEO and founder of Elegant Disruption, a provider of fractional and flexible strategy and communications consulting for marketing services and technology leaders.
