Fish sauce, a Chinese cooking staple and Hawaii favorite ingredient, is always on Sabrina Stephen’s shopping list.
Stephen, 65, regularly buys the condiment and will continue to do so even though her eyes have bulged in recent weeks as she’s seen the price rise to $9.99 from $5.99 at her usual Asian grocery store in Chinatown.
Outside of Chinatown, Stephen said she’s seen fish sauce cost $11.99.
“Canned goods, sugar, everything is higher now,” Stephen said. “I have to cut the corners to see what’s on sale, what’s not — that’s all we can do.”
The jaw-dropping prices are bound to increase even more for Hawaii consumers if President Donald Trump’s 145% tariff on Chinese goods and 10% tariff on nearly all foreign imports continue.
While businesses have already been hit hard by the international trade war, the impact has only just begun to trickle down to local customers and visitors, who will ultimately have to pay more to keep the businesses alive, according to Justin Tyndall, an associate professor at University of Hawaii’s Economic Research Organization.
Right now, he said, it’s hard to quantify the exact toll that the tariffs will take on Hawaii’s consumers as many businesses are still squeezing inventory that was purchased and shipped before the levies went into effect.
“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 said. “Something like electronics and households 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.”
That’s changing consumer behavior and eroding consumer confidence.
Trump’s tariffs have made customers hesitant to purchase investment goods like furniture and cars. The Hawaii Automobile Dealers Association said Hawaii auto sales have been down 1.3% since January.
Chamber of Commerce Hawaii President and CEO Sherry Menor-McNamara said businesses have told her that customers are already stocking up or limiting their spending on more essential goods.
“When consumer behavior changes, that impacts our local businesses, which impacts our economy, and how do we then recover from that? How do we shift?” Menor-McNamara said. “That is yet to be seen.”
But trickle-down costs might hit Hawaii consumers harder because even locally produced goods depend on foreign manufacturing, and the state does not have the bandwidth to support mega-factories found in parts of the mainland.
“The reason that these supply chains developed in China was (because) that was the most efficient way to develop goods, so if we take away that option, we’re going to have less-efficient production of those goods. Ultimately, that will mean that they will be more expensive (for customers),” Tyndall said.
The culminating effect of preexisting inflation and new international tariffs ultimately falls on customers like Evelyn Leroux, 75, who is now paying more for her clothes and groceries, especially the ingredients for her seafood diet.
Leroux said that she has noticed an increase of 50 cents to a dollar from her favorite dim sum shop at Maunakea Marketplace since two weeks ago.
“I need to be efficient (with spending) because I’m retired,” Leroux said. “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.”
With goods directly imported from China, Vietnam and some Southeast Asian countries, Maunakea Marketplace is a staple of Honolulu’s Chinatown. The food court and merchant courtyard is a pit stop for many locals and tourists passing through, including mom and dad Holly and Chris Durham and daughter Lydia Durham, 16, who came to Hawaii on a family vacation from South Carolina.
The small family also traveled to Oahu with Holly Durham’s brother Chris Jones, who said, “We knew we were going to be spending a lot of money when we got here.”
Still, visitors from the mainland are affected by the rising costs just as much as their isle counterparts, which could cause some to limit how much they are willing to spend while on vacation.
Durham said she hasn’t been seriously curbing her spending during this trip. However, she is more conscious of her spending behavior since she’s gearing up to buy a car for her daughter, who is getting her driver’s license this year.
“Because of that expense, and knowing now that that’s going to increase, we’re scaling a little on this (trip) just because we have to have enough in savings,” Durham said.
Hawaii businesses say they are noticing similar shifts in consumer behavior. According to a recent survey by the Chamber of Commerce Hawaii, 40% of local businesses reported a drop in “customer demand or purchasing behavior.”
Sabrina Stephen, who works at Kimi’s Beads, Fashion and Gifts — a wholesale and retail souvenir shop in Chinatown — said foot traffic has dropped gradually since January.
When customers come into the store, she said, many will just browse or try to bargain prices with her and then leave.
“We say $10, they say $5,” Stephen said. “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 is a common practice in Chinatown, but Stephen is striking fewer deals. In today’s economy, she said, cutting prices isn’t sustainable for business.
“The tourists, when they get off the airplane, I think people tell them to go bargain (in Chinatown),” Stephen said. “We can, we do it, we make a deal with them because we want to sell … but if it’s dirt cheap we can’t make it. Especially since in Chinatown, we can’t mark it up that much.”
While bargaining for lower prices is a tradition for some, more customers these days might find it a necessity. Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, said in a statement that consumer sentiment was down 11% since March and 30% since December.
“Consumers report multiple warning signs that raise the risk of recession: Expectations for business conditions, personal finances, incomes, inflation and labor markets all continued to deteriorate this month,” Hsu said.
Menor-McNamara said that data reverberates in Hawaii where, despite recovering slightly from the pandemic, consumer spending is back to an uncertain economic standing.
“The term ‘uncertainty’ has been used many times recently, but it’s so true in terms of what we hear,” Menor-McNamara said. “Some are just rushing to buy as much as they can of imported products until they see those increases, so it’s just being more cautious of how those dollars are being spent.”
That means customers are holding off on buying investment goods, like a car or home goods and furniture, both of which rely heavily on Chinese imports.
Sam Hasan, Honolulu’s Elite Discount Furniture store manager, said, “We’ve seen at least 20% (of customer flow) go down. That’s at least as of right now, without raising prices up. Imagine when the prices go up higher.”
Elite Discount Furniture, which also has locations in Aiea and Kaneohe, has not increased its prices yet, but Hasan said that already, fewer people have been buying home products overall.
“Everybody that buys furniture wants to buy a home. Interest rates are higher, and not (many) people are buying homes,” Hasan said. “We just have to see.”
In the meantime Waipahu’s ABC Furniture owner Ronald Chong is taking matters into his own hands by gradually increasing prices by 10%.
He nearly had to shut down after the first Trump administration imposed a 25% tariff on steel and a 10% tariff on aluminum imports in 2018.
This time around, Chong said he is coming off a pandemic and has a new store location in Honolulu to support. If he’s put into a similar situation, Chong said the 30-year-old Waipahu branch could be at risk of having to close down.
“Somebody has to make up the difference,” Chong said.
He said his customers haven’t seemed to notice — at least not yet.
