President Donald Trump’s tariffs were designed to safeguard domestic industry, but the duties may act as a “stealth tax” on consumers whose incomes are becoming increasingly stretched.
That’s according to new reporting from the Kaplan Group, which shows that shoppers are increasing their credit card use and accruing more debt in light of rising costs. If fully realized on July 9, Trump’s “reciprocal” duties could drive risks of fiscal insecurity even higher.
The commercial collections agency drew data from the Federal Reserve, the Bureau of Labor Statistics and the Peterson Institute for International Economics. Comparing that data with estimates of tariff costs, it found that average American households could pay between $1,200 and $3,000 more per year due to added duties.
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There are compounding factors that inform this estimate. For one, inflation was already on the rise before any new tariffs kicked in, hitting 3 percent in January. With some tariffs now in place and others still looming, Kaplan Group analysts believe shoppers are increasingly reaching for credit cards, “not for luxuries, but for basics.”
At the same time, credit card debt—along with interest rates, which have climbed to over 22 percent—is on an upswing. Revolving credit is growing at an 8.2-percent annualized rate as of January. This means that the debt amassed this year will be “harder than ever to repay.”
“Tariffs not only increase the direct price of goods, but also compound costs when consumers finance those purchases on credit cards,” the group wrote.
In a low-tariff scenario, the average duty burden to U.S. households might hover around $1,200, but if consumers are using credit cards with 22-percent APRs, the cost rises sharply to over $1,400. Things look even grimmer in a high-tariff scenario, where costs could climb to $3,000. With interest, shoppers could be looking at nearly $3,700 in debt if they buy their basics on a credit card in 2025. “This compounding effect turns a one-time cost increase into a long-term financial burden,” Kaplan Group wrote.
High-interest debt could quickly “snowball” into monthly payments that a household can’t afford. And if prices continue to rise and debt continues to grow, the risk of recession skyrockets. “Rising consumer debt, combined with tariff-driven inflation, could reduce household spending—the primary engine of the U.S. economy,” the report said.
Consumers have already pulled back on discretionary purchases, and continued economic uncertainty could cause them to participate even less in things like travel, dining, entertainment and, of course, retail.
The tariffs aren’t just impacting shoppers—exporters, too, have had their confidence dinged by rapidly shifting trade policy and mercurial consumer confidence.
Three-fifths (60 percent) of companies polled for Allianz Trade’s Global Survey between March and April said they expect a negative impact from Trump’s trade war. Those results span the globe, with 4,500 companies polled across China, France, Germany, Italy, Poland, Singapore, Spain, the United Kingdom and the U.S. evincing a cloudier outlook.
Turnover will decline by up to 10 percent over the course of the next year, 42 percent of exporting companies believe (compared to just 5 percent who said the same before “Liberation Day”). Fewer than half of the companies queried expect to see positive growth over the next 12 months, compared to 80 percent who said they projected gains before the April 2 tariff announcements.
What’s more, 27 percent of firms said they are prepared to temporarily halt production as a result of higher tariff costs, while 32 percent actively intend to stop imports or offshore manufacturing to avoid the duties.
While an interim trade deal with China has brought the tariff rate down from the triple digits announced in April, the average import duty rate for China-made goods still hovers at 39 percent—much higher than the 13-percent average seen before Trump took office for the second time. According to Allianz analysts, U.S.-based firms are likely to continue to frontload imports as a strategic response while also rerouting shipments to keep Customs costs in check.
Before the Chinese duties took effect, a whopping 79 percent of companies surveyed raced to bring in orders under the wire, and one-quarter of them even started before the presidential election in November. Rerouting to other markets is another strategy that is now being bolstered by the lowering of shipping costs, which have plummeted 50 percent since the beginning of 2025.
And as trade tension frazzles decision-makers, they’re pushing the costs onto both their customers and suppliers. While the president seems, more recently, to be amenable to striking trade deals with global partners, price hikes are inevitable, with 54 percent of American firms saying they plan to increase them no matter what.
Firms are also shirking responsibility for duties and seeking to pawn tariff costs off on suppliers. The Allianz survey revealed that preferences for International Commercial Terms are moving toward “Delivered Duty Paid” globally, which means that sellers are responsible for managing logistics and costs—including Customs duties—all the way to the buyers’ doorsteps.
It’s likely that even if the double-digit duty rates stipulated during Trump’s Liberation Day announcements are lowered over the coming weeks and months (the president hinted at such an outcome recently), supply chain diversification will be exacerbated by the entire trade war debacle. About one-third of survey respondents told Allianz that they’ve probed new markets for exports and supply, and nearly two-thirds are planning to do so in the future.
For companies that are bought into global supply chains, geopolitical risks and trade tensions are “provoking reconfigurations,” the analysts wrote. More than half (54 percent) of the respondents said they consider those factors, along with social unrest in the countries they do business in, to be the top threats to their supply chains.
Even prior to Trump’s tariff announcements, 34 percent of firms had already identified new locations for offshore manufacturing and supply, while 59 percent were planning to do so. U.S. firms that have longer, more complex supply chains (and more overseas production) were more bullish: 60 percent said they’d already found new sourcing locales to relocate to.
Many firms are motivated to de-risk by pulling more of their sourcing away from China, even with the 90-day trade truce in place. About one-quarter of American firms are increasingly favoring Western Europe (up from just 11 percent before April 2), and the same number are looking to Latin America (up from 9 percent). Notably, the Asia-Pacific region has lost some of its appeal, with just 34 percent of respondents saying they plan to diversify sourcing to these countries (compared to 61 percent before the tariffs were announced), likely because of China’s deep integration into the regional supply chain.
Notably, Chinese firms with supply chains in the Americas were even less willing to commit to deepening ties to these regions, and they’re increasingly looking to both Western Europe and other Asian countries as the answer. Thirty-nine percent of Chinese companies surveyed said they were looking to the Asia-Pacific to relocate.
On both sides of the U.S.-China relationship, export opportunities have diminished, Allianz data showed. While already on the lower side, U.S. businesses said their exports to China and East Asia stand to drop from 21 percent to 10 percent, while Chinese firms’ interest in exporting to North America dropped from 15 percent to 3 percent.
“Despite the recent positive developments, the trade war persists and volatility in trade policies means that decoupling is likely to gradually continue,” analysts wrote.
