4 ms·

Fat cats don't get fat by letting the cost of producing goods eat into their profit (completely tortured sentence I know). Companies simply add the cost of the

by cco 2y ago

Fat cats don't get fat by letting the cost of producing goods eat into their profit (completely tortured sentence I know). Companies simply add the cost of the tariff into the price of the final good to the consumer. It does not eat into the margin. To wit, every tax a business pays today is included in the cost of the final good sold, there is no reason to believe these tariffs won't be as well.

cudgy 2y ago
But your view is too shortsighted as I’ve said, in other comments. There will be a reaction to these increases in prices and increases in margins. Small startups and even large companies will enter the space to take advantage of the increased margins. It’s not a static system. However, it does not happen immediately and it takes some time.
- cco 2y ago
  Two points: First, there are not necessarily increased margins, the margins may stay the same or even decrease. Some companies may choose to keep their margins the same, in which case profit would increase. But importantly your _profit_ will not decrease, you'll defend that as the seller even if that means your margins decrease. Second, small companies are _more_ sensitive to taxes (costs), not less sensitive. Existing, large players are better able to absorb costs _and_ command stronger pricing power relative to new entrants to the market. But overall, your view of the "market" just doesn't play out in reality. You can go look at any industry that encountered tariffs in Trump's first term, you may also look at any consolidated market in the last twenty years. Market power has been heavily concentrated, regulatory capture has gone up, and the result is that markets aren't working as you may expect.
  - cudgy 2y ago
    Sorry, but your statements are inaccurate. I posted this link separately and it fully demonstrates what I would expect: more jobs in the US to compensate for the increased cost to import. In this case, the jobs were provided by existing manufacturers like LG and Samsung; however, these jobs could also be produced by new competitors entering the space. https://finance.yahoo.com/news/higher-prices-extra-jobs-lessons-from-trumps-washing-machine-tariffs-185047360.html https://finance.yahoo.com/news/higher-prices-extra-jobs-less...

by cco 2y ago

cudgy 2y ago

But your view is too shortsighted as I’ve said, in other comments. There will be a reaction to these increases in prices and increases in margins. Small startups and even large companies will enter the space to take advantage of the increased margins. It’s not a static system. However, it does not happen immediately and it takes some time.

cco 2y ago
Two points: First, there are not necessarily increased margins, the margins may stay the same or even decrease. Some companies may choose to keep their margins the same, in which case profit would increase. But importantly your _profit_ will not decrease, you'll defend that as the seller even if that means your margins decrease. Second, small companies are _more_ sensitive to taxes (costs), not less sensitive. Existing, large players are better able to absorb costs _and_ command stronger pricing power relative to new entrants to the market. But overall, your view of the "market" just doesn't play out in reality. You can go look at any industry that encountered tariffs in Trump's first term, you may also look at any consolidated market in the last twenty years. Market power has been heavily concentrated, regulatory capture has gone up, and the result is that markets aren't working as you may expect.
- cudgy 2y ago
  Sorry, but your statements are inaccurate. I posted this link separately and it fully demonstrates what I would expect: more jobs in the US to compensate for the increased cost to import. In this case, the jobs were provided by existing manufacturers like LG and Samsung; however, these jobs could also be produced by new competitors entering the space. https://finance.yahoo.com/news/higher-prices-extra-jobs-lessons-from-trumps-washing-machine-tariffs-185047360.html https://finance.yahoo.com/news/higher-prices-extra-jobs-less...