Cramer: Heavy Consumer Impact From Tariffs 'Highly Unlikely'

What impact will ongoing tariffs on Chinese made goods have on consumers?

A rough estimate suggests that if every penny of tariffs is passed on to consumers next year, the average family would pay $1,000 more per year — a figure which is "not ideal" but "highly unlikely," CNBC's Jim Cramer said Friday. 

What Happened

Many retail stocks heavily sold off throughout Thursday's trading session, with the most likely explanation being that companies will at least partially absorb higher costs from tariffs, Cramer said during his daily "Mad Money" show.

As a result, many retailers are likely to fall short of Wall Street estimates in the near term, and "that's why the stocks were shelled," he said. 

Why It's Important

"If the tariffs really were going to fall entirely on the heads of consumers, the retail stocks wouldn't have had such a mess," Cramer said. "Plus we did just get a tax cut that more than makes up for the tariff figure every time I do the numbers."

What's Next

Another possible explanation for the sell-off in retail stocks could be "one big rotation" where investors are selling expensive retail and department store stocks in favor of cheap stocks that are trading a discount valuation relative to the broader index, Cramer said. 

Investors should be optimistic, as this is "a far more sustainable rally" compared to a shift from cheap to expensive stocks, the CNBC host said. 

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