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It’s the tariffs. You’re assuming that everyone will raise the price and have the same goals. Some businesses will see it as an opportunity to undercut and gain
by aurareturn 1y ago
It’s the tariffs. You’re assuming that everyone will raise the price and have the same goals. Some businesses will see it as an opportunity to undercut and gain market share.
After all, total profit = sales margin * sales volume. You can increase your profit by increasing your volume because you kept your prices unchanged while your competitors decided to increase prices.
- marknutter 1y agoTariffs don't affect products that are produced locally.
- avgDev 1y agoWrong.
- myrmidon 1y agoTariffs affect local product prices in a lot of ways. 1) They reduce competitive pressure so local producers can raise prices without losing market share (that is the actual point) 2) They increase local demand for production capacity and labor in general, driving up costs even in sectors that are completely unaffected by the tariffs themselves
- marknutter 1y agoMcDonald's was never sourcing chicken for their chicken nuggets from outside the country.
- myrmidon 1y agoYeah, but that does not really matter; everyone else that imported meat (or feed ) now competes for McDonalds suppliers, which means higher prices. You can also expect to pay more for labor itself, because every bit of industry that you bring back (or scale up, at least) with tariffs competes with the essentially fixed labor pool, and there was not a lot of slack (unemployment) to start with.
- skirmish 1y agoFast food prices jump a lot whenever minimum wages increase. I am convinced this is a major contributor to McDonald's price rise.
- deeg 1y agoTariffs raise the price in tangential ways. Tariffs on Chinese steel means US chicken wire producers switch to more expensive US sources. Increased demand for US sources make it even more expensive. Farmers buy the more expensive chicken wire, passing the added expense to McDonalds, which passes it on to you.
- ivape 1y agoThe chicken nuggets were edging past $5 dollars before the tariffs, during the Biden era. Mcdonalds owns Chipotle so they are well aware of premium pricing for regular food. They applied the same pattern to Mcdonalds, the same way Starbucks once convinced everyone coffee can be as much as $8. This is all before tariffs. No one's giving tariffs a pass, but we are giving regular people a pass for some reason. It takes people to do all of this. To further my point, the Gap owns Old Navy and Banana Republic. It's all the same material mostly, but it's tiered pricing (Old Navy cheapest, Gap, to Banana Republic most expensive). Over time, they raised the floor of pricing at Old Navy. Financial engineering is not just happening in the stock market. The floor for prices on certain things have just gone up with no real reason other than "its about time we raised these prices", and it's happening in a collective way.
- aurareturn 1y agoThe floor for prices on certain things have just gone up with no real reason other than "its about time we raised these prices", and it's happening in a collective way. This invalidates every supply and demand theories. I'm unconvinced that you are right.
- disgruntledphd2 1y agoIn consumer markets, the notion of a rational consumer is a myth. If we had rational consumers then the world would be very, very different.
- aurareturn 1y ago
- rsynnott 1y agoThis is true if and only if those products have no imported inputs, and if tariffs aren't causing general inflation which is forcing up wages of the people making them via cost-of-living increases. Ultimately, unless you're an autarky (in which case tariffs are in any case irrelevant), high tariffs should be expected to lead to broad price increases, even for goods which are not directly imported.
- wtfwhateven 1y agoNot even remotely true.