Us Retail Giants Raise Prices Due to Tariffs

Trump's is unusual in that it's widely known not just that it was ghost written, but who did it. Often the real writer's name isn't known, and we can only guess at whether it was ghost written (again, the answer is almost always "yes").

Perhaps this is just coming from a finance background. But I’m not a fan of folks quoting numbers from “financial reports” without saying what report they’re citing.

> having a hard time finding the ideological bias you're talking about in the El País article

To be clear, I don’t allege this article has a bias. Just that I’m going to be sceptical of a paper calling something out that aligns with their priors.

The tariffs are primarily hitting the discretionary sector of products, which means people can simply stop buying them. There's also product replacement as an option. For instance the next time somebody's coffee maker breaks they end up buying a French press only to discover that not only is it way cheaper (no filters!), but it never breaks and makes way better coffee anyhow! (Pro Tip: don't use boiling water)

[1] - https://www.ers.usda.gov/data-products/charts-of-note/chart-...

Blue Rose’s (the leading dem pollster) comprehensive retrospective of the 2024 election was telling: https://data.blueroseresearch.org/hubfs/2024%20Blue%20Rose%2... (“Our best estimate is that immigrant voters swung from a Biden+27 voting bloc in 2020 to a Trump+1 group in 2024.”).

So most people thought that "no taxes on tips" was a Trump position that differentiated him from Harris.

There are lots of ways to design a progressive consumption tax, but yes, one way is to tax luxury goods at a higher rate than essentials. This is already done in many states, for example, where groceries (or at least "basic" groceries like bread, milk and produce but not prepared foods) are exempt from sales tax.

Another way is a sales tax rebate, e.g. where everyone can file for a rebate of sales tax of, say, the first $10000 of goods in a year. So poorer people with lower expenditures end up having a much lower effective tax rate.

I mean, at the extreme, yes (some countries do have sin taxes on those sorts of things). But for a more basic example, take EU VAT. EU countries usually have three or four VAT rates; basic essential goods are often VAT-exempt.

(This occasionally leads to fun disputes; for instance see the famous Jaffa Cake court case, or the more recent determination by the Irish Supreme Court that Subway's bread was not bread.)

Additionally there are a lot of goods that are GST exempt.

Things like basic groceries, prescription drugs, feminine hygiene products, hearing aids etc...

Economists don’t love income taxes, and they really don’t love investment/capital gains taxes (see the NPR article I linked).[1]

The bigger problem is what you mean by “higher-bracket income tax.” 60% of all income is earned by the top 40% outside the top 1%: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr.... To have the kind of welfare state the U.S. has, you need to raise taxes on those people a lot. But that’s politically impossible. In 40 years, we never managed to undo the bulk of Reagan’s tax cuts.

If you’re not willing to raise the rates on more than half your potential tax base, then you’ll need to do very steep hikes on the top 1%. Or you need to explore things like wealth taxes and taxing unrealized capital gains, which economists really hate.

The European countries realized that in a globalized economy, you have to be competitive on business and investment taxes. That’s why they heavily tax the middle class, including with consumption taxes.

[1] They don’t love tariffs either. But tariffs implicate concerns about foreign relations that are basically outside the scope of economics. The economic models simply don’t factor in the political risk of outsourcing all your steel production to a potential enemy. That’s why nearly every developed country ignores the economic consensus when it comes to things like agricultural subsidies. The political risk of not being food sufficient simply outweighs the economic downside.

Heck - do you think there is a bulk of supporters that agree with you now, when stated so bluntly and with the context that you consider yourself a democrat?

Can you at least understand that from an outsider watching this arc, it feels like Trump supporters are being led around by the nose - even if the changed policy positions are being championed by completely different individuals than the previously vocal supporters who were concerned with price inflation?

As for the specific policy argument - import taxes aren't the usual framing of consumption tax that applies to consumers, but rather they apply to industry as well. Taxing intermediate steps creates a drag on the economy, similar to if we taxed business revenue. And obviously doubling the price of equipment required to set up a new factory is completely contrary to the purported goal of bringing back domestic manufacturing.

(Never mind how several decades of following economist prescriptions about spherical cows in a vacuum has created an absolute mess)

You can take a loan from your RRSP for a downpayment, but only on your first home purchase.

(I was an immigrant and had owned a house in the US, and I am apparently the only person who had ever answered that question honestly, so I could not borrow from my retirement, and I had to pay provincial sales tax because of this as well).

It very much is in tariff loving countries. What are customers gonna do? Cry? Even if a local alternative exists, why would they not jack up prices to be just around the tariffed prices of the imports? You don't get domestic products cheaper than the imports even if they exist.

Targeted tariffs have always existed, and the US and the EEC and then the EU were involved in a lot of trade skirmishes that did result in some barrier being put in place. This is not the same.

Oh, it's a great example. You only have to read on a bit to see this:

https://boardgamegeek.com/thread/3462759/article/45685404#45...

--- start quote ---

The cost for sure will be greater than expected but it's not anything we would ask of our preorder customers. We did have to make a minor adjustment in price moving forward.

--- end quote ---

We don't know how much of a loss they are taking on those pre-orders.

> One more:

Another great example if you only understand what's written, emphasis mine:

--- start quote ---

We’ve said from the beginning that we wouldn’t pass any tariffs on to our backers.

But that doesn’t mean we’re not getting hit by them. We are. Hard. And the costs aren’t small.

So instead of a tip jar, we made something for you.

Introducing the Tariff Buster Promo Pack: a small thank-you gift to help us absorb the hit

While that obviously doesn’t cover the full cost of tariffs on each game, it helps us a little

--- end quote ---

Companies absorbing a hit and losing money on a one-off product is somehow "examples of retailers with 30%+ margins".

> just saying that there are definitely exceptions to “customer pays 100% of tariffs”.

These exceptions show that the only way to do that is to lose significant amounts of money to keep a promise on one-off products.

None of these exceptions show that they have 30%+ margins (quite the opposite), or that they absorb them happily (quite the opposite).

And yes, after pre-orders and backing have been fulfilled, if the companies don't fold after losing money, the product that hits the shelves will cost more.

According to an LLM I just consulted Walmart's net margin for the last 5 years for which we have data never got above 3%.

To calculate net margin, we include every expense, e.g., management salaries, e.g., the cost (rent of depreciation) of the stores. To calculate gross margin, we include only the expense of obtaining (buying or making) the goods solds.

When considering whether a retailer can eat the cost of tariffs or must pass them on to the consumer, net margin is more relevant than your figure, which is gross margin.