Pass-Through of Tariffs: Evidence from European Wine Imports

I can share my own experience as a small business owner. I sell coffee. I engage in some direct trade and also buy some coffee from domestic vendors who already have the coffee stateside.

I primarily buy Costa Rican coffee and they got hit with a 10% tariff. That adds like 5 cents to a latte. Whatever. I’m not raising my prices over that. But then Brazil got nailed with much higher tariffs and they are the #1 exporter. Colombia was another one that got hit with high tariffs and they are a major producer. Suddenly, that was driving up the cost of my Costa Rican coffee as demand that was previously met by Brazil and Colombia shifted to other countries. I went from being the exclusive U.S. importer of my coffee to being in a bidding war. The last time I imported coffee, it cost me twice as much as the shipment prior. Then they tried to raise the price again. I ended up having to find new suppliers before things eventually settled down when the people in charge realized you can’t produce coffee in the U.S. (Technically, Hawaii produces exorbitantly priced coffee at a max capacity that amounts to a rounding error relative to domestic demand. There’s no other place in the U.S. with the climate to grow coffee. Besides, it’s incredibly labor intensive. Coffee essentially can’t be produced here.)

Cups were a real pain in the ass too. We were buying our stuff from the Dominican Republic and Latin America, but people are mostly getting that stuff from China. When China became prohibitively expensive, everyone rushed to find other suppliers. That drove prices up and messed up lead times in the short term. The story with most packaging was the same.

Literally every single item required for my business increased in price. It turns out nobody produces anything 100% domestically without any foreign input. My syrups are made in the USA but the bottles they come in are from somewhere else. My empanada shells come from Argentina. Everything from chocolate to pistachios to straws and cleaning supplies. Everything is a product of global trade, whether it’s ingredients, raw materials, packaging, or the machinery and tools used to manufacture it. To maintain my own equipment, I have to buy parts from Italy.

I held out for several months. I was feeling it as a business owner as well as every time I went to the store. I knew my customers were feeling it. I live in the neighborhood where my business is located. A lot of my customers are retirees on a fixed income. The last thing I want to do is add to the pressure. Meanwhile, I have employees who deserve a living wage. I have my own needs. I dumped some products and suppliers that became too expensive for me to sell and have any remaining dignity. I saved everywhere I could without compromising on quality.

About 7 months into this bullshit I had to raise prices for most of my products. It couldn’t be helped. Still, I’m embarrassed at how much we have to charge for some items.

I feel like the last year has been complete chaos. It’s economic shocks and supply chain disruptions everywhere I look. It’s just one thing after another and that’s before I even turn on the news.

The statistic you cite does not necessarily contradict what the parent comment is saying. "Up 29% since February 2020" is an absolute change since a specific point. The parent comment is saying prices have "come down" i.e. since their peak. It can still be up overall, so long as it's not up as high as it was at one point.

EDIT: To be clear, the parent comment might still be wrong, or might be right only within a biased sample (i.e. their own experience). I'm only making the point that the statistic you're referencing does not outright disprove what they're saying. Prices can be up since six years ago AND down since two years ago (random time periods chosen for illustration only).

The money printer was also going brr. And that is probably the cause for some of the inflation.

>The reason is that markups along the chain of intermediation between importer and consumer can scale up the percent pass-through in tariff costs, cumulating over distribution stages and resulting in a direct dollar impact on prices to be greater than tariffs paid, even though the percent change in consumer price is less than the tariff ad-valorem rate.

The retailer is paying more for its stock. Everyone loses despite higher prices.

Eh, you don't think Vance will keep them going when he wins in 28? I do agree that the uncertainty is an issue.

Now companies will get the money back, then what? They will not even reduce prices, probably, so why should we give them the money?

Yep, if things were going well there wouldn't have been makeshift morgues with refrigerated trucks, sick people having to be moved around to different countries, the military deploying field hospitals, corpses piling in the streets. Those examples are from a variety of countries, which shows how bad the situation was globally.

Norway had that too; without lockdown. Curfews would require a change in the constitution and the last time they happened was during WWII which makes them doubly unpopular.