While consumers have been largely shielded from the immediate price hikes expected from the latest round of U.S. tariffs, a period of reckoning may be approaching, according to top economist and Under Armour Board Chair Dr. Mohamed A. El-Erian. That was a key takeaway noted by Benzinga after reviewing a recent Substack article posted by Dr. El-Erian. However, the economist’s position may be more nuanced.

In the Substack piece, Dr. El-Erian argued that the real impact of the tariffs — what some critics have labeled a direct “tax” on Americans — has been delayed, not dismissed, and is poised to be felt unevenly across the economy, Benzinga suggested.

“The initial impact of new tariffs on consumer prices has, for many economists, proven surprisingly muted,” Dr. El-Erian wrote. “However, recent economic data and corporate earnings reports are helping to illuminate why this has been the case and what might lie ahead.”

The world-renowned economist said the answer lies in the dynamic reactions of both foreign exporters and domestic importing firms, combined with the role of inventories.

Dr. El-Erian’s framing of the conversation appears to be accurate based on the impact articulated by vendors in the active lifestyle marketplace during conference calls following earnings releases for the most recent quarter (retailers start heavy reporting this week). Commentary from the corner office varied widely based on each company’s inventory position, pre-April 4 actions taken in the supply chain, the sources of production, the U.S. as a percentage of total sales, and the brands or products that had consumer permission for higher prices, according to SGB Media’s assessment of earnings calls through August 22.

Dr. El-Erian credited the lack of impact on consumers to date as “Initial Shock Absorbers.”

“When the new U.S. tariff regime was first announced, its precise magnitude and duration remained uncertain,” El-Erian explained. “This ambiguity led many exporters and domestic importing companies to make a crucial calculation: absorbing the initial cost was preferable to immediately risking alienating consumers. The worry was that significant price hikes, introduced for a potentially temporary and reversible policy, could damage customer loyalty and market share.”

He said that many companies chose to absorb the tariff costs and sacrifice some margin rather than “substantially” raising selling prices, providing that initial buffer for consumers.

“Furthermore, some domestic companies had proactively accumulated significant inventories of imported goods ahead of the tariffs’ implementation,” he noted. “This stockpiling offered them additional flexibility, allowing them to continue selling goods at pre-tariff prices for a period, further delaying the pass-through of costs to the consumer.”

Dr.  El-Erian expects these early moves to give way to a gradual and partial pass-through of price increases.

“While these buffering mechanisms have played a significant role, recent indications suggest that the initial era of significant tariff absorption may be evolving,” he said. “As uncertainty over tariff levels recedes and existing inventories diminish, companies are beginning to face more challenging, longer-term decisions about pricing and profits.”

Still, he did admit that the degree to which the tariff costs will be passed along to consumers will be uneven.

“Businesses that sell products with inelastic demand (where consumers are less sensitive to price changes) are more likely to pass on a larger portion of the tariff cost increases,” Dr. El-Erian suggested. “Conversely, companies facing elastic demand, particularly those serving lower-income consumers, will find it far more challenging to raise prices without risking significant demand destruction.”

No where was that more evident than in recent comments made by Amer Sports executives who discussed the ability to raise prices at the company’s three largest brands.

Amer Sports CEO James Zheng said the company was “well positioned and managed through a wide range of tariff scenarios, given our premium brands with pricing power, secular growth trends and relatively low U.S. revenue exposures.”

Company CFO Andrew Page added that a 29 percent year-over-year increase in inventory at the end of the second quarter was primarily driven by three factors:

  • Early receipt of fall 2025 merchandise, which included tariff mitigation tactics;
  • Higher goods in transit from lower airfreight usage, which means Amer carries the goods on its books much longer; and
  • FX translation from the weaker U.S. dollar.

Page continued that the Wilson Sports dominated Ball & Racquet Sports segment  will experience a slight drag from higher tariffs in the second half of 2025 because of a few factors due to the termination of the steel and aluminum exemption, under which Wilson racquets and bats previously fell, and higher actual tariff rates in Vietnam and other sourcing markets than the 10 percent Rest of World region assumption in its previous guidance. He also noted that Wilson softgoods product fell victim to the temporarily imposed 145 percent China tariffs.

“But as far as Salomon and Arc’teryx, we continue to acknowledge that we have untapped pricing flexibility that we will definitely lean into should we need to,” Page noted when talking about consumer permission to increase prices.

Dr. Mohamed A. El-Erian is president of Queens’ College, Cambridge University. He serves as part-time chief economic advisor at Allianz and chair of Gramercy Fund Management. The Rene M. Kern Practice Professor at The Wharton School and Lauder Senior Global Fellow (University of Pennsylvania), he is a Financial Times contributing editor and the author of two New York Times best sellers. He serves on several non-profit boards, including the NBER, and those of Barclays and Under Armour.

Dr. El-Erian formerly served as CEO/co-CIO of PIMCO (2007-2014) where he worked for fourteen years, and as chair of President Obama’s Global Development Council. (2012-2017). He first joined PIMCO in 1999 as head of emerging markets portfolio management. He re-joined the firm at the end of 2007, having served two years as president and CEO of Harvard Management Company, the entity that manages Harvard’s endowment.

Before joining PIMCO, Dr. El-Erian was a managing director at Salomon Smith Barney/Citigroup, having spent 15 years at the International Monetary Fund in Washington, D.C. where he rose to deputy director.

Benzinga pointed out that Dr. El-Erian’s position provides a more nuanced timeline for the argument made by investing pros like Ross Gerber, the co-founder, president and CEO of Gerber Kawasaki Wealth and Investment Management, who stated on X (fka Twitter) that tariffs are a consumption-based tax, contrary to their intended use as a trade policy tool for re-shoring manufacturing, as they have been promoted by the Trump Administration.

Editors’ Notes: In other words, Dr. El-Erian knows what he is talking about when it comes to such things. On the other hand, President Trump still appears to believe that the exporter is responsible for paying tariffs, as evidenced by his continued comments. So there’s that. – jmh

Image courtesy Under Armour/Mohamed A. El-Erian