Hawaiian Consumers Brace for Effects of Tariffs
Hawaii's favorite ingredient, fish sauce, has been a staple for Sabrina Stephen, and she's been shelling out more cash for it lately. The 65-year-old resident of Chinatown has seen its price increase from $5.99 to a jaw-dropping $9.99 at her usual Asian grocery store. Even outside of Chinatown, fish sauce can cost as much as $11.99.
The rise in prices is bound to grow even further as President Trump's 145% tariff on Chinese goods and 10% tariff on nearly all foreign imports continue. Businesses have already suffered from the international trade war, but the impact on local consumers and visitors has just started to unfold, according to Justin Tyndall, an associate professor at the University of Hawaii's Economic Research Organization.
"We've yet to see, really, the start of broad price increases, so depending on how tariffs progress, we'll have to see which products get hit first," Tyndall explains. "Something like electronics and household goods that are very exposed to China might take a little longer to show up in price shocks, but if they stay in place for the next few months, we'll start to see very large price increases."
This changing consumer behavior and eroded confidence has left many customers hesitant to make big purchases like furniture and cars. The Hawaii Automobile Dealers Association reported that auto sales have been down 1.3% since January.
Businesses are already feeling the strain, with around 40% of local businesses reporting a drop in customer demand or purchasing behavior, according to a recent survey by the Chamber of Commerce Hawaii. Sabrina Stephen, who works at Kimi's Beads, Fashion and Gifts, a wholesale and retail souvenir shop in Chinatown, has noticed foot traffic dropping since January.
"We say $10, they say $5," Stephen laments. "We cannot have that. We have to pay rent, we have to pay people, and still people think that they can have the cheap things."
Bargaining has become less frequent as businesses struggle to cut prices without going out of business. Evelyn Leroux, 75, has noticed a 50 cents to a dollar increase in prices for her favorite dim sum at Maunakea Marketplace since two weeks ago.
"I need to be efficient (with spending) because I'm retired," Leroux says. "We only get one check every month. Everything is up. I have to spend it efficiently - I ride the bus now because gas is expensive."
Consumers like Leroux might feel the impact harder because even locally produced goods depend on foreign manufacturing, and Hawaii doesn't have the capacity to support mega-factories found on the mainland.
Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, reported that consumer sentiment dropped 11% since March and 30% since December. The uncertainty affects not only local businesses but also tourists visiting Hawaii, causing them to limit their spending while on vacation.
The culmination of existing inflation and new international tariffs ultimately falls on customers like Evelyn Leroux and Sabrina Stephen, who will need to adjust and even cut corners to make ends meet.
- Sabrina Stephen, a resident of Chinatown, has seen the price of fish sauce, a staple ingredient for her, increase due to tariffs on Chinese goods and foreign imports.
- Businesses on Oahu, like Sabrina's store, Kimi's Beads, Fashion and Gifts, are facing a drop in customer demand and foot traffic, according to a survey by the Chamber of Commerce Hawaii.
- Consumers like Evelyn Leroux are finding it necessary to reconsider their spending habits because of increased prices for locally produced goods that still depend on foreign manufacturing.
- In an attempt to cope with rising costs, businesses like Sabrina's are trying to cut prices without compromising their profit margins, making bargaining less common.
