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Those statements aren't contradictory. Pricing in non-commodity goods is always a human phenomenon, driven ultimately by the idea that a business can 'get away with it' without losing too many customers to competitors.
Tariffs, on the other hand, provide a good reason/excuse to raise prices. Affected firms see their cost structures blown up, so they have to raise prices at least somewhat. Unaffected firms see that their competitors are raising / must raise prices, so they know that they can raise their own prices in the now less-competitive market. That's how and why tariffs work: they give domestic firms protection to have profits in excess of what they would have under a free trade counterfactual.
Any argument that tariffs don't raise prices is a very long-term one, relying on the idea that it will be easy to open new firms and expand domestic production to ultimately return to a competitive market. This has nearly no effect on short-term pricing, and it's why the least-damaging changes to tariff policies are long-run and well-telegraphed plans, slowly implemented.
Try going on a shareholder earnings call. They're free. It's company executives trying to impress shareholders. It's the only place I've ever heard people brag about how much they've raised their prices.
Scams are scams, man. This is not economics, it’s human nature. Tariffs did not make the price of your BLT go up, it’s greed.
What do you want to do about it, Stalin? Use the power of the state to legislate away human greed? Imprison these greedy people? Impose price controls (which have a long, storied history of not working and only leading to shortages and queues)?
We build economic policy around human nature, not otherwise. Humans will always seek to maximize profit at all costs. If you lock out foreign suppliers from competing using tariffs, local suppliers will reason that they can charge more and will rightly do so. And tariffs in one area end up affecting so many other areas in unforeseen ways. That's how tariffs on chemical fertilizer might end up affecting the price of something as mundane as bacon, lettuce, and tomato.
That's why free markets are important. They give buyers options, and sellers then have to lower their prices reasonably to be chosen/picked from that sea of options.
If you want lower prices, remove tariffs and trade restrictions.
Even for products made in the US if other things increase the cost of running a business those costs will get passed on to the buyer. It takes LABOR to get bacon, lettuce and tomato....have you heard about ICE raids and crops getting wasted because people are not showing up to work? That will affect prices as less produce = higher prices as demand increases.
If equipment gets more expensive, then cost of produce gets more expensive. I work for a manufacturing company...under Trump our cost has been spiking due to insane tariffs....those costs are passed to people who make equipment and to farmers, then to YOU.
Any gouging price increase is a gaping hole for a competitor (businesses are greedy and therefore will take money from other businesses) to come in and steal business. This is something that is obvious to people who have been on the business side and mostly opaque to people who have only ever been on the consumer side.
We have plenty of examples, with documentation and receipts, of businesses participating in price fixing, collusion, and other cooperative behaviors that result in higher prices for consumers and reduced competition between businesses.
You are naively assuming that all businesses express greed in the same way. Some of them realize they can make quite a lot of money with a lot less work by working together to raise prices. Not all markets are easy for a newcomer to break into, competition is far from guaranteed if the established players are cooperating.
The issue isn't that we have plenty of examples (which is actually a handful, people always go to the same 2 or 3 cases, but I digress), it's that we have orders of magnitude more counter-examples that are ignored.
It's important to not build your world view on headlines, because headlines are headlines because they are outliers. It's not news when companies competitively adjust prices, it happens thousands of times a day all over the economy. If there was an "undercut on price" button in business meetings, you wouldn't even be able to read the text on it it would be so worn out.
Your worldview is incredibly naive if it doesn't include substantial collusion and cooperation among the capital class.
> They can't effectively compete with major chains
I don't think they were suggesting a couple Mom & Pop shops become national chains. I think they were suggesting that collectively Mom & Pop shops could compete against the chains. If everyone replaced 50% of their chain fast food meals with mom & pop shops then each mom & pop shop might only see a small bump in orders but that would be devastating to the chains.
After all, total profit = sales margin * sales volume. You can increase your profit by increasing your volume because you kept your prices unchanged while your competitors decided to increase prices.
1) They reduce competitive pressure so local producers can raise prices without losing market share (that is the actual point)
2) They increase local demand for production capacity and labor in general, driving up costs even in sectors that are completely unaffected by the tariffs themselves
No one's giving tariffs a pass, but we are giving regular people a pass for some reason. It takes people to do all of this.
To further my point, the Gap owns Old Navy and Banana Republic. It's all the same material mostly, but it's tiered pricing (Old Navy cheapest, Gap, to Banana Republic most expensive). Over time, they raised the floor of pricing at Old Navy. Financial engineering is not just happening in the stock market.
The floor for prices on certain things have just gone up with no real reason other than "its about time we raised these prices", and it's happening in a collective way.
The floor for prices on certain things have just gone up with no real reason other than "its about time we raised these prices", and it's happening in a collective way.
If we had rational consumers then the world would be very, very different.
All it takes is for one business to see it as an opportunity to lower prices to gain more marketshare for everyone else to also have to lower prices.
This would again, be true in a very simplified world. A lot of the time your suppliers have committed to provide X widgets by Y date at Z place, and it's not trivial to swap out A widget provider for B widget provider.
And this is the easy case, how much would it cost to rebuild all your LLM based tools with Anthropic after building on OpenAI.
So, yeah in theory it requires perfect co-ordination but really if there are 4 big suppliers and 3 increase price, their profits will increase and the CEO of the other will probably be fired by the board.
You can also expect to pay more for labor itself, because every bit of industry that you bring back (or scale up, at least) with tariffs competes with the essentially fixed labor pool, and there was not a lot of slack (unemployment) to start with.
Ultimately, unless you're an autarky (in which case tariffs are in any case irrelevant), high tariffs should be expected to lead to broad price increases, even for goods which are not directly imported.
WE are shitty greedy people. Shitty greedy people will use tariffs and become shittier and greedier. So yes, you are right, tariffs will make it worse.
This society lacks civil sense, moral sense, ethical sense, communal sense, common sense, from top hat to bottom bare feet.
This only gets fixed together.
And since this is super low qualy, there should be an additional markup of 30-50%
We can look for mythical technical explanations as to what’s happening, but all things used to explain anything in our society is just to describe the state of your fellow man. Your fellow man is greedy. There.
I called some of these places and had to tell them to stop scamming customers. Fuck that, I’m buying a pizza oven.
Tariffs
Price gouging and folks continuing to pay
Lack of alternatives - have a garden? Know how to work on a car? Etc.
Genuine competition for resources around the world and increased demand for those resources