Christmas shopping season temporarily spared? UBS: Trump's delay in tariffs may delay price shocks until 2026.

UBS Group Chief Economist Paul Donovan said that US President Donald Trump will delay the imposition of tariffs until August 1, which may postpone the impact on prices over the Christmas holiday until 2026. Donovan said that the 10% tariffs affecting all trade will raise inflation in July and August, but additional tariffs imposed by Trump on specific countries may not affect shoppers until much later. Donovan said, "By the time goods arrive in the US, the entire supply chain is complete because many retailers have clearly ordered goods for Christmas in advance. This will clearly mitigate some of the damage to US consumers in the second half of the year." Trump announced the implementation of new tariffs on August 1. However, Donovan warned that ultimately, any delay cannot prevent tariffs from fully affecting American households. He said, "This will impose a heavy tax burden on American consumers. By the end of this year, real wages adjusted for inflation will fall instead of rise, and by then, we will start to see some real problems emerging." Donovan painted a scenario where consumers initially rely on credit cards and savings, then cut back on spending. Meanwhile, the speed and extent of the inflation impact may depend on to what extent retailers seek to profit from expected price increases related to tariffs. But the situation could still change, especially depending on whether the White House sticks to its policies. Donovan said, "We have to assume that Trump will back down because that is his style. I think when you start hearing the pain from US businesses and consumers, you will start to see Trump make concessions on some issues."