Businesses are raising prices after tariffs — even on unaffected goods

SavedByGrace3 said:

Two months later, they are down even more. I am not going to be brainwashed into thinking or saying they are higher just because of some manufactured and biased "larger, more reliable data." The only reliable data is the receipt I have in my hand. I am fortunate that I know and understand that personal experience is the only thing that really matters to me. Believe the leftist propaganda if you choose, but I am going to enjoy the reality of my personal experience!
"Say it ain't so" all you want!

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Did ribeyes come down? (I’m still paying ~$16.00/lb!)

Pommer said:

Did ribeyes come down? (I’m still paying ~$16.00/lb!)

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Food is still climbing, and we haven't yet seen the effect of the tariffs on the cost of the food supply chain.

Of course, we are going to get the effect that this thread is all about.

When a tariff was placed on foreign-produced washing machines, the prices of domestic washing machines rose to match the new price point.

And then the prices of dryers--which hadn't been touched at all by the tariffs--also rose because people common bought washers and dryers as pairs.

Say it aint so said:

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Businesses say they're raising prices on goods unaffected by tariffs, according to surveys and anecdotes released by the Federal Reserve on Wednesday.​

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Why it matters: This could be a sign that price hikes might be more widespread than expected, with concerns that some companies might use tariffs as cover to unnecessarily raise costs.​

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How it works: About 110 manufacturers and more than 200 service firms in the New York and New Jersey area were surveyed during the first week of May.​

• That's before tariffs on China were reduced from 145% to 30%, and before the boomerang court decisions that invalidated the tariffs before temporarily reinstating them.
• 90% of manufacturers, and three-quarters of service firms, said they import some goods, and are exposed to higher tariffs.

By the numbers: About three-quarters of firms said they were fully or somewhat passing along tariff increases to customers.​

• About half of companies reported a decrease in their bottom line due to tariffs. Some have reduced headcount.
• "A significant share" said they raised prices of goods and services unaffected by tariffs — a way to spread higher costs across inventory, or to take advantage of their customers' expectations that prices are rising --AXIOS

Keep in mind this is the same thing that actually happened the first Trump trade war.
Businesses, and yes those non tariff made in America businesses will not forgo an opportunity to raise prices in a tariff environment.

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Companies will raise prices to what people are willing to pay. That has nothing to do with tariffs.

If their costs change, the business has choices as does the consumer. However, there is no reason to believe that the customer will pay more for the same product merely because a business chooses to raise prices.

RDKirk said:

Food is still climbing, and we haven't yet seen the effect of the tariffs on the cost of the food supply chain.

Of course, we are going to get the effect that this thread is all about.

When a tariff was placed on foreign-produced washing machines, the prices of domestic washing machines rose to match the new price point.

And then the prices of dryers--which hadn't been touched at all by the tariffs--also rose because people common bought washers and dryers as pairs.

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This makes little sense to me. If the consumer was willing to pay more, why weren't companies charging more before?

I am less than impressed with consumers who chose to pay more merely because a company decided to charge more, as in the case of the dryer. I AM impressed by the retailers who clearly label the "tariff tax increase" so that customers can better make choices.

mark46 said:

This makes little sense to me. If the consumer was willing to pay more, why weren't companies charging more before?

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Human psychology is often irrational and folks get very, very hung up on their expectations of what things should cost rather than what they actually cost. If consumers are used to volatility (e.g. gasoline), then they accept volatility. If they're used to slow upward growth (e.g. cars), then they expect slow upward growth. And if they're used to stability (e.g. video games), then they expect stability. Within any of these paradigms, prices tend to find an equilibrium where consumers are okay charging an amount that producers are okay accepting. Either side is obviously happy to accept terms more favorable than the equilibrium, but consumers are especially reluctant to pay more; and if one firm tries to disrupt this equilibrium and violate those expectations, consumers can react very, very negatively. I used video games as an example because the nominal (i.e. non-inflation-adjusted) price of a top-shelf video game was stuck at $45-50 for something like 30-35 years, despite the games themselves becoming orders of magnitude more complex and expensive to produce; and when somebody dared pushing it to $60 or $70 (which only happened within the last few years), people got really angry.

But if something external upsets that equilibrium and those pricing expectations - say, a pandemic or a tariff war - well, then consumer expectations get recalibrated; more than one producer will likely ride that wave; and they'll all have something/somebody else to blame.

mark46 said:

This makes little sense to me. If the consumer was willing to pay more, why weren't companies charging more before?

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Didn't have a "the government made us do it" excuse.

mark46 said:

I am less than impressed with consumers who chose to pay more merely because a company decided to charge more, as in the case of the dryer. I AM impressed by the retailers who clearly label the "tariff tax increase" so that customers can better make choices.

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What does impressing you have to do with it?

mark46 said:

Companies will raise prices to what people are willing to pay. That has nothing to do with tariffs.

If their costs change, the business has choices as does the consumer. However, there is no reason to believe that the customer will pay more for the same product merely because a business chooses to raise prices.

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Sometimes people have to buy stuff.