Tariffs Raised Consumers' Prices, but the Refunds Go Only to Businesses

(although honestly I wouldn't be surprised if such a push ended up with the profligate spendthrift in chief sending more paltry "stimulus" checks with his ugly-ass signature on it right before midterms)

Not every business the business relationship works that way, but it’s not unusual.

As for a surprise goes, I don’t know about surprised, but certainly it’s worth noting that after a massive illegal tax …. voters get no justice.

I'm not surprised, but I think this is a miscarriage of justice.

When an item's margin becomes large, the risk/reward equation becomes favorable for new competition to come in. That puts downward pressure on prices.

For a given good, let's say that tariffs increased the business's cost for that good. If that cost goes away and the price stays constant, then the margin increases. That triggers more competition.

It's the "one price rule" in economics.

Everybody is willing to pay different prices. If you're starving, you're probably willing to pay "all my money" for food. But you don't, you pay the same price as everybody else who aren't willing to pay that much. The seller can't set the price to "all your money" because somebody else will be willing to sell for less.

> but every player in a market has little reason to do so when they’re enjoying the higher profits.

In that case any producer willing to defect from this implicit pact and lower their prices slightly will be able to make all the profit. Anti-trust should be ensuring there are enough producers that there's always somebody willing to goose their profits at the expense of their competitors by lowering prices.

It should be, but isn't.

They were able to raise their prices all at once because of tariffs. If they'd done that by simply agreeing to raise prices, it would be collusion.

Once the tariffs go away, prices would be naturally expected to fall back to their previous equilibrium because the same forces apply.

It's even more complicated than that, of course. But if there was competition before tariffs then there is competition after tariffs and you'd expect them to act similarly.

Pricing is set by two things: supply and demand. Tariffs make supply more expensive, less supply is brought in, therefore the consumer must either pay higher prices or go without. Yes, they can just choose not to buy, and then the importer can choose not to import.

It’s not binary. Some customers were willing and some weren’t. Even if the company was able to keep selling the item profitably, it may have reduced its total profits at the higher price point (fewer sales) and would gladly revert once the tariff is gone.

It’s just the NYT. Let’s not demean the rest of the media for the faults of the NYT.

  > Importantly, journalists in media, classically inept at any economic analysis, implied that 10% tariff = 10% RRP rise. They never corrected themselves, nor for the economists who falsely claimed the economy would collapse.

It's also pretty vague without any examples of what specifically deserves corrections.

Lovely strawman.

If your prime example is a luxury car with a ton of margin built in, you need a better example. Tariffed commodities absolutely had the costs passed on, and far more of those are sold than high margin luxury products where manufacturers had the option to compress margins vs passing on the cost.

Also, there are lots of products that go through multiple middle men, the tariffs were included and marked up at every stage. Very few things go from manufacturer to retailer with no middlemen.

I’d guess about 1/4 to 1/3rd of tariff costs were absorbed and the rest passed along to the eventual end consumer.

I suspect you work nowhere near the money at work, the closer you get to the money, the more you realize exactly what is built into a price.

Assuming you are not being sarcastic, I would expect actually the opposite.