Tariffs are coming for Gen Z

If you’re an American who buys things or sells things, you’re going to take a financial hit from President Donald Trump’s tariffs. The science of economics might be dismal, but it’s good enough to tell you that when the government increases the price of imported goods by anywhere from 10% to 145%, someone has to pay — be they importer, buyer, manufacturer, seller, or consumer. That’s just the way the Great Material Continuum works.

Now, a basic Gen Xer like me — and believe me, we’re pretty basic — has seen versions of this before. We’ve lived through two dot-com busts, the Great Recession, Black Monday, and the economic skadoosh of COVID. Line goes up, line goes down. But younger Americans just now maturing into solid consumers weren’t born in this darkness. So to the newly minted adulters of Gen Z, I say: Welcome! This is going to suck.

And it’s going to suck for Gen Z in particular.

By dint of being new to the workforce, Gen Zers typically earn less than other age groups. And economic shocks, as a rule, disproportionately hurt poorer people. But in this case, tariffs won’t just raise prices on stuff we all rely on. They’ll also increase the cost of a lot of products that appeal specifically to Gen Z. It’s hard to say by how much. A team of economists from the Federal Reserve Bank of Atlanta calculates that even moderate tariffs — 10% on China, 25% on Canada and Mexico — could raise the price of everyday essentials by 1.63%. Some manufacturers and retailers may find ways to absorb the added costs. And Trump keeps monkeying with the levels and the timing: On Monday he temporarily reduced his China tariffs to 30%. But in the worst-case scenario, industry analysts I spoke with say the president’s tariffs could wipe out some Gen Z products entirely. They’ll just cease to exist.

So, at the risk of stereotyping Americans between the ages of 13 and 28, here’s a rough accounting of what’s likely to happen to four things Gen Z buys a lot of.

(1) Beauty products

For years, beauty goods have been reliably recession-proof — industry watchers call it “the lipstick effect.” Beauty spending beat everything else during the Great Recession, and again after 2020. But this time? Not so much.

Gen Z spends a lot of money on cosmetics — about $2,000 a year on average, according to one survey. Only millennials reported spending more, but then again they also earn nearly twice as much. That might explain why the Gen Zers who responded to the survey were also much more likely to report regretting how much they’d spent on beauty products.

High on the list of favorites: unguents and potions from countries with famously intense skin- and hair-care-regime cultures depicted by influencers on social media — like South Korea and Japan. The United States is South Korea’s second-largest market for cosmetics. And a lot of high-end American brands do their manufacturing there — meaning those products will also be subject to tariffs.

What’s more, many cosmetic companies buy almost all their packaging from Asia. And entire categories of products — sheet masks, eye patches, pimple patches — come almost exclusively from Asian factories, no matter the company or the price point.

Now, big transnational conglomerates can often afford to absorb some new costs while sorting out their margins and their supply chains, instead of passing the increases on to customers. But niche products — especially those produced by small, independent outfits — will suffer more. “Some products and brands will have no choice but to raise prices, at least in the US market,” says Kelly Kovack, the CEO of BeautyMatter. “Brands are investing in their hero products, so I also expect to see a lot of out-of-stock situations. We will see fewer gift sets this holiday — gift sets are low-margin in the best of times.”

This doesn’t necessarily mean we’ve lost the forever war on zits and wrinkles. But like all wars, this one depends on logistics. “For ‘can’t live without’ products, people will most likely remain loyal and continue to use them,” Kovack says. “But they may cut something else out of their regime, or use them more judiciously to make the product last longer.” And if half of a product’s customers suddenly switch to buying it only half as often, it might not survive. When it comes to Gen Z’s favorite beauty products, things are going to get ugly.

(2) Tech gadgets

A few tech titans had the foresight to buy front-row seats to the inauguration of Donald Trump. They’ve also, perhaps not coincidentally, been granted some exceptions to tariffs on the smartphones and laptops they manufacture, at least for now.

But they’re not the only tech companies that depend on international supply chains. And the companies that make the dizzying array of cheap options you see when you scroll down on Amazon can’t just raise their prices. If they do, well, they won’t be cheap anymore. Expect them to just disappear.

“It reduces the options and selection people have within a price range,” says Rick Kowalski, the senior director of business intelligence at the Consumer Technology Association. “And it changes the dynamic of how people think about replacement cycles.” Translation: Maybe people keep their old earbuds instead of springing for the new model. That drives down sales and puts yet more pressure on manufacturers to either raise prices or cut back on production.

Think headphones, Bluetooth speakers, soundbars, even e-bikes. What used to be a casual purchase won’t be so casual anymore. “Gen Z is a generation that considers technology essential to their daily lives,” Kowalski says. “They identify with it and see it as a means of self-expression. They don’t have as much to spend on it, but they’re passionate about it, and they will be affected disproportionately.”

(3) Boba tea

Gen Zers eat in restaurants less than other demographic groups, and they’re more price-conscious. They’re also, on average, more ethnically diverse, more likely to buy snacks and treats, and more likely to seek out new foods to try. Add all that up and you get a craze for boba tea: Asian-originated flavors mixed with tiny, chewy balls of tapioca starch, slurped through oversize straws. It’s fun!

It’s also incredibly popular. In 2000, America imported 1.2 million pounds of tapioca from Taiwan. Today we import 34 million pounds (and another 2.9 million from China). And unless something changes, imports from Taiwan are set to be tariffed at 32% starting in July.

Huge fast food chains like Starbucks sell boba tea — as do big Asia-based retailers and thousands of little mom-and-pop places. The big chains will have an easier time finding new supplies for starch, flavored syrups, and teas. Or they’ll just slurp up the added cost. But the smaller the shop, the more likely its owners will have to raise prices, or simply eighty-six high-tariff items from the menu. If that includes your usual medium sweet wintermelon hojicha milk tea, you’re out of luck.

(4) Meds for anxiety and depression

For years, young adults have been reporting higher levels of mental health concerns. Between 2005 and 2020, the percentage of 18- to 25-year-olds reporting at least one major depressive episode in the prior year doubled. The National Center for Health Statistics reports that somewhere around 15% of GenZers suffer from depression; teenage use of antidepressant medications has gone up 38% since 2015. Diagnoses of ADHD have also been on the rise among Gen Z.

Meds aren’t like face masks or cool earbuds or boba tea. They’re essential for the health and well-being of millions of young Americans. And a lot of them are likely to be subject to tariffs. More than 60% of the world’s generic pills, which already run on thin margins, are made in India. And even drugs made in the US contain ingredients sourced from overseas.

There’s some good news here, for which you can thank the Drug Enforcement Administration. “ADHD drugs are Schedule II controlled substances, and the DEA requires that the active ingredient and the finished product are made in the US,” says Marta Wosińska, an economist at the Brookings Institution’s Center on Health Policy. “Tariffs might squeeze margins, but I don’t expect to see manufacturers walking away.”

But now for the bad news: Antidepressants and anti-anxiety drugs are not subject to the same restrictions. So depending on where they come from and who makes them, the cost of getting them to the US is likely to go up, especially if they come from Europe or India. Wosińska says Americans who use name-brand drugs will probably be hit with higher prices — as will those whose insurance plans have high deductibles that don’t cover the cost of generic drugs. But the most likely outcome of tariffs on drugs, she says, is that they’ll drive up premiums. So one way or another, Gen Zers will likely wind up paying more for their mental health.

Taken together, Trump’s tariffs are going to land hardest on those who can least afford them. And that doesn’t even take into account the president’s elimination of the “de minimis” exception, which took effect May 2. Direct-to-consumer retailers like Shein and Temu weren’t the only companies that depended on the exception, which effectively made it free to ship cheap stuff from China. In 2023, that duty-free rule applied to 7.3% of all the consumer goods imported by the US. Because Gen Zers have less income than older generations, they’re going to wind up paying a steeper price for all the budget-friendly stuff they’ve come to depend on. From moisturizers to mental illness, the bottom line on Trump’s tariffs is clear: The younger you are, the more painful this is going to be.

Adam Rogers is a senior correspondent at Business Insider.