There are increasing signs that Trump’s tariff TAXES are cascading down to consumer prices, as companies run out of options for keeping prices down. On average prices on imports have risen 3%, and it’s about to get a whole lot worse.
Ever since Trump announced his “liberation day” tariffs, I have been sounding the alarm that they will lead to inflation unlike any we’ve seen in years and ultimately a recession— if not a depression. Modern America is built on global trade. It’s one thing to surgically improve trade relationships, it’s quite another to take a baseball bat to them.
From NYT today:
“Before Trump announced tariffs for much of the world on Thursday night – Adidas, Procter & Gamble, Stanley Black & Decker and many other large corporations told investors that they either had increased prices or planned to do so soon to offset the tariff costs.
Companies like Walmart and the toymakers Hasbro and Mattel had already warned that tariffs would lead to higher prices.
“We have no interest in running a lower-margin business, particularly due to tariffs,” Richard Westenberger, the chief financial officer of Carter’s, a children’s apparel maker,”
Well duh. For the hundredth time, companies cannot absorb hundreds of billions of dollars and losses. As the CEO of a major corporation said yesterday on a conference call “we do not intend to run a low margin business.“ Well duh. I’ve said the same exact thing for months now. They have to recover their costs. They will do it through layoffs, shrinkflation, quality shortcuts, plant and location closures, and alas, price increases.
I’d like to pause to gasp at the ignorance of Americans who can’t or won’t comprehend these fundamental principles of economics. Every day on social media, I see hoards of people celebrating Trump’s tariffs like they’re the greatest thing since sliced bread. The willful ignorance is beyond stupefying.
Anyone, including a sixth grader, who took a moment to understand basic economic principles could see there will be terrible consequences for both America and many other countries, especially small businesses and the lower classes, who rely on lower in prices for imports that cannot be purchased in America. It’s not a matter of if, it’s a matter of when.
One more thing. It’s a fool’s errand to judge the economy by the stock market. The stock market is being propped up by energy, AI technology, and healthcare (sick care) investments: three industries that will not lead to economic growth for the majority of Americans. If anything, those industries steal jobs, not create them.
Get ready for hard times. Due to Trump’s ignorance and ego, and a brain-dead republic who is easily distracted and appeased by bread and circuses, the good time are gradually coming to an end.
What will it take for Americans to wake up? Widespread poverty.
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