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shiandowyesterday at 5:37 PM5 repliesview on HN

Wait, am I reading this wrong. The producer and importer try to soften the impact of the tarrifs only for the retailer to massively increase their prices?


Replies

jm4yesterday at 6:21 PM

Many retailers increase their prices by multiples of the tariff increase rather than a straight passthrough so that they can maintain their margins. It's probably why a lot of the biggest retailers with monopolies aren't complaining much about tariffs. They mostly keep the same margin and actually increase revenue. Meanwhile, it's been incredibly damaging to small businesses and consumers. Functionally, tariffs have been a massive wealth transfer.

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kjshsh123yesterday at 6:35 PM

Nobody is "trying to soften the impact of tariffs". Everyone was and is trying to maximize profits. Who ends up paying has to do with "elasticity" which roughly is about how much the tax actually impacts you.

In this case, it ended up that the retailer raised prices, probably because the retailer can just sell domestic wine for cheaper (close substitute). Retailer profits still didn't increase because of reductions in sales (~12% iirc) and increase in after-tariff inventory prices. This is textbook econ 101. Substitute, profit maximization of a firm, supply and demand etc.

You're confusing exporter and importer lowering prices with the retailer facing lower after-tariff inventory costs. Inventory costs still went up.

RobotToasteryesterday at 5:58 PM

Never miss an opportunity to raise prices.

ceejayozyesterday at 5:40 PM

See also: Grocery stores. Prices went up "due to COVID". Prices will never come down again.

(I've no doubt the supply chain was a mess for a hot minute, but years later?)

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estimator7292yesterday at 6:10 PM

Yes, that sounds exactly correct.

Prices only go up, all that's required is a plausible excuse.

This is what happens when you shape your entire individual and cultural identity around "number go up"

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