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Duty-free shopping may not offer significant savings despite new tariffs.The impact of tariffs on consumer prices is uncertain, as businesses may absorb some of the added cost.

A perk of traveling abroad is being able to shop duty-free, skipping taxes on pricey items like designer purses, watches and top-shelf liquor. 

That may seem especially appealing with new tariffs of at least 10% on most goods imported into the U.S., but the savings may not be as steep as you imagine. 

Part of that is because of duty-free shops’ pricing. 

“The deals are no bigger than the deals that you’d get anywhere else on sale,” said Erik Gordon, clinical assistant professor and area chair of Entrepreneurial Studies at the University of Michigan’s Stephen M. Ross School of Business. “You can go to Costco, you can go other places and get better prices or equal prices.” 

He said it’s also unclear how the tariffs will be applied. Importers, exporters or brokers will pay them upfront, but they don’t automatically pass them on to consumers. 

To illustrate this point, the professor offered an example of a company that imports T-shirts. Say they previously sold them for $10, but now face $2 in tariffs. 

“Do I raise my price to the customer, to consumers to $12?” he asked. “If I do, the customers might switch to another T-shirt (company) because the reason they were buying the T-shirts might have been because they’re 10 bucks.” 

“Maybe I just take less profit. Maybe I raise the price to $10.50, not $12. Or if I raise it to $12 from $10, maybe people buy three T-shirts instead of four T-shirts. It is plain old Economics 101 supply and demand,” he added, saying it would be the same if the cost of raw materials like cotton or labor went up, regardless of tariffs.  

Yale’s Budget Lab predicts prices on goods like clothing and textile will rise significantly, but its director of Economics, Ernie Tedeschi, noted, “Duty-free shops charge a markup as well, which may increase if there’s more demand, so it’s unclear just how much travelers might save in the end.” 

USA TODAY has reached out to Duty Free Americas and Dufry Duty Free Airport Shops for comment on potential impacts. 

(This story was updated to add a photo.)