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Tariffs are fees levied by governments on goods imported into a country. They typically apply to specific products or categories and are paid by the importer at the time of import. When tariffs are imposed, the impact on consumers often mirrors other tax increases — prices rise, though not always immediately or in direct proportion to the tariff.
For global mobility professionals and expatriates, tariffs can subtly influence the cost of living in host locations, shaping purchasing power and allowance calculations.
Timing and Price Adjustments
Price changes may not occur right away. When tariffs are announced in advance, importers might stockpile goods before the tariff takes effect. As a result, consumer prices may remain stable for a time while existing inventory clears. If the tariffs are expected to be short-lived, sellers may choose to wait out the change rather than raise prices.
How Tariffs Affect Prices and Demand
The price increase rarely matches the tariff rate exactly. Importers and retailers adjust based on price elasticity of demand — how sensitive consumers are to price changes. The availability of alternatives and whether a purchase is essential or discretionary both play key roles.
For example, a 20% tariff on imported goods might translate to only a 10% consumer price increase if sellers absorb some of the cost. Over time, sustained tariffs can shift demand away from affected imports toward domestic or tariff-free goods, potentially driving broader inflation.
Everyday Examples: Tariffs in Daily Spending
Some purchasing patterns are affected more than others. For instance, if high tariffs are placed on peanut butter imports into China, a U.S. national on assignment who frequently buys peanut butter could see higher price increases than a colleague from France who does not purchases it.
These subtle differences highlight how tariffs can influence expatriate cost-of-living indexes and individual spending habits.
The Current Tariff Landscape in the United States
As of fall 2025, the future of U.S. tariffs remains uncertain. After President Trump announced sweeping tariff measures, multiple states and businesses challenged the policy in court. So far, lower courts have ruled that the administration does not have the authority to impose such broad tariffs under the International Emergency Economic Powers Act (IEEPA).
In November, the case reached the Supreme Court, where justices expressed skepticism about this interpretation of IEEPA. The final decision is still pending. Even if the administration loses, it may pursue other avenues to implement tariffs.
An Unpredictable Environment for Businesses and Consumers
In the meantime, tariffs are being used as leverage in both international negotiations and domestic politics. Rates have fluctuated, exemptions have been added or extended, and implementation deadlines have shifted. Some countries and trade blocs have responded with retaliatory tariffs, further influencing global prices
This uncertainty has made both businesses and consumers more cautious about major purchasing decisions.
AIRINC’s Ongoing Monitoring
AIRINC continues to monitor cost-of-living trends through our cost-of-living surveys and research. With our diverse market basket modeling expatriate spending, any broad impact of tariffs will be reflected in future COLA adjustments.
Stay tuned to AIRINC’s blog for updates on how global economic shifts, including tariff changes, affect mobility programs worldwide.
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