By Isabella Torregiani
3:28am PDT, Jun 5, 2025
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CNBC senior retail reporter
Courtney Reagan and
Squawk Box co-host
Becky Quick broke down the potential "real cost" of President
Donald Trump's proposed tariffs.
On the Tuesday, June 3, episode of the morning news program, the duo laid out what they say could be the economic reality behind Trump's trade strategy.
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According to Courtney Reagan, the outlook is bleak, especially if President Donald Trump's tariffs are enforced to their full extent.
Using an exclusive CNBC model, Reagan and Becky Quick analyzed how these proposed tariffs could impact the retail industry.
"While tariff policy remains in flux, retailers have to decide what to do," Quick explained. "Either mitigate the tariff cost, find a way to make up for it, or pass it along in prices."
Quick added, "Most large retailers are trying to work on mitigation strategies, although Walmart and Macy's are among those that have said that even with mitigation, some prices will increase."
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Courtney Reagan used a men's cotton sweater made in China as an example, breaking down what it will look like if these costs are passed to consumers.
"The true cost of tariffs is almost impossible to quantify," Reagan noted. "But if a retailer didn't or couldn't absorb the cost and passed it all on, how much would prices increase?"
Reagan laid out more details, explaining, "Before the April 2 tariffs, a cotton men's sweater made in China cost $6.80 to produce. Pre-liberation day, a 41.5% total tariff was already in place for that sweater shipped to the U.S. That equals $2.82. The cost of logistics and sourcing that adds another 95 cents."
"So put together, the total cost of making that sweater is $10.57. With a typical 65% markup for retailers, that sweater would sell for $30 before the new tariffs."
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With President Donald Trump's new tariffs in effect, the cost quickly changes. Courtney Reagan explained how the increased tariff burden affects the price tag of that same sweater.
"Add the 41.5% existing tariff … and then the 10% universal rate [and the] 20% fentanyl-related tariff, the current tariff rate becomes 71.5% of the manufacturing cost, or $4.86, making the new cost the retailer pays to make that sweater $12.61."
According to Reagan, to keep the same 65% margin, retailers would now price the sweater at $35.80, a 19% increase from the original $30.
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Courtney Reagan detailed just how high prices could rise if President Donald Trump's proposed tariffs from April 2 are implemented.
"At that 41.5% pre-April 2nd existing tariff for that sweater, plus the additional 145%, the tariff rate is 186.5% for the sweater, or a tariff cost of $12.68, making the new cost the retailer pays to make this sweater $20.43."
With the same 65% markup, that means consumers would pay $57.97 — a 92.3% increase from the original price.
