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Comment by stetrain | Hacker News Reader

Company A imports steel and pays a tariff, uses the steels to make screws in the US.

Company B imports lumber and pays a tariff, manufacturers it into furniture rails in the US.

Company C buys furniture rails from Company B and screws from Company A and assembles them into an end table.

Company D buys the end tables wholesale from Company C and distributes them on Amazon.

How does Amazon display the tariffs paid by Company A and B and correctly show the price difference in the final product?

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Yes, that would be complicated. EXCEPT most of what amazon sells is Company A in China makes product -> Company B imports and sells on amazon. That's easy to calculate.

You're right, but the parent comment was asking about the exception to that majority.

A and B passed along the tariff costs to C, which passed those costs to D. D now costs more, assuming they pass the delta cost to the consumer. The only delta a customer cares about is the past/current cost of D, which is what amazon would presumably display.

Isn't this the horn everyone keeps trumpeting? It doesn't seem complicated.

There’s a million reasons besides tariffs a cost may increase. Sellers with no tariffs will just increase prices to pad profits if they’re given an opportunity to let Amazon pin it on tariffs. There is a lot of evidence supporting the theory that this type of manufactured inflation is what drove the recent pandemic era inflation. Corporate profits alone are the best indicator of this occurring. They raised prices by a lot more than their cost increased because they could hand wave broadly at inflation.

> Sellers with no tariffs will just increase prices to pad profits if they’re given an opportunity to let Amazon pin it on tariffs

Well, realistically they'll do that _anyway_. If you decrease price competition, prices go up. That is the order of things.

A lot of things go counter to economic theory. If you’re an American company used to selling 30% above Chinese competitors, you likely can’t ramp up production quickly or will hesitate to make the decision but will likely increase your prices simply because you can and partly because you’re used to the charging x% over Chinese goods. You may even feel being price competitive with China lessens your perceived value, quality, etc. in the consumer’s minds.

I'd rather solve that problem than the tariff thing. I was thinking just this morning about the bull-whip effect that never came.

It is complicated because tariffs are not just "passed off". In the real world, tariffs are almost always marginal, meaning each company is willing to absorb some of the cost, ie lower profits. In parent's example, the US has a large steel industry and rail companies relying on imports cannot arbitrarily raise prices because they need to stay competitive with companies using domestic. Markets are also dynamic and simply comparing pre/post price may work temporarily, but for a persistent tariff that metric will become increasingly meaningless as price inevitably fluctuates due to other factors.

Prices fluctuate all the time especially on Amazon items. Inflation is also a factor. Just taking prices from Jan 19, 2025 as a baseline and attributing all other changes to tariffs isn't going to be accurate.

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