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> Repricing, though, isn’t as easy as changing a tag—in part because suppliers and big-box stores are engaged in an epic tussle over who will pay what. > Retai
by jameslk 1y ago
> Repricing, though, isn’t as easy as changing a tag—in part because suppliers and big-box stores are engaged in an epic tussle over who will pay what.
> Retailers, including Lowe’s and Home Depot, buy Thompson Traders’ wares and set the retail price themselves. And they have been reluctant to pay Thompson Traders more.
It seems like this sort of scenario would benefit from some kind of risk protection, like insurance, or a futures market
- brutal_chaos_ 1y agoSo more middlemen to make the cunsumer pay even more, joy.
- jameslk 1y agoConsumers will pay more regardless in this type of circumstance. But they will pay less if businesses don’t suddenly start going out of business, eliminating competition and jobs
- Braxton1980 1y agoDoesn't insurance normally work by protecting rare instances whose cost is amortized over the base? This would be a claim by a large amount of insurance clients at once
- deleted 1y ago[deleted]
- jameslk 1y agoA sudden claim against many should be priced into the cost of the insurance, offset by some risk adjustment. The goal is ultimately price stability, if the price is not too high (that’s the unknown)
- lazide 1y agoInsurance tends to do really badly in ‘black swan’ type situations. Which pretty much are what Trump is doing.
- jameslk 1y agoIsn’t the point of insurance to provide protection against black swan events? If it’s more likely to happen then it’s not really a black swan?
- lazide 1y agoNo [https://en.m.wikipedia.org/wiki/Black_swan_theory https://en.m.wikipedia.org/wiki/Black_swan_theory]. It’s the difference between getting cancer (calculable, but perhaps not high probability), and getting hit by a meteorite (not actually calculable, very severe consequence).
- adgjlsfhk1 1y agoinsurance is best for individually unlikely but societally likely items. otherwise pricing it is really hard.
- hdgvhicv 1y agoFire burns your house down, insurance is easy. Asteroid hits New York, insurance won’t pay out.
- lazide 1y agoOr in many of these scenarios, can’t pay out, because they’re bankrupt. The biggest issue with black swan events (in the proper usage) is everyone is screwed because no one saw it coming and/or it’s so widespread no one can do anything about it for individuals.
- JumpCrisscross 1y ago> would be a claim by a large amount of insurance clients at once You’d insure against a specific product from a specific country being hit with a tariff. Tariffs are going up and down, sometimes in a way that may as well be random. (India not recommending Trump for a Nobel prize.) On its face, this doesn’t seem uninsurable.
- eCa 1y agoIn the current situation wouldn’t that just mean one more layer that don’t know how to price their product?
- jameslk 1y agoMy assumption is that businesses that are negotiating their prices between retailers are not experts in geopolitics and what the next move will be from the government and courts. Someone may study this more or have connections to know that better, and therefore are more willing to take bets
- SpicyLemonZest 1y agoI don't think it's an insurable risk. If you were trying to underwrite some "adverse effects of government regulation" policy in 2024, would a surprise 50% tariff on Indian exports have even entered your calculation?
- jameslk 1y agoPerhaps in the short term but I wonder if that calculus changes as more time goes on with erratic tariff changes (which has technically been going on for years, just to a much lesser degree). Is there a market need great enough for price stability to offset the risk? It seems tariff whiplash will be an ongoing problem
- estearum 1y agoMaybe not insurable, but there are firms buying and selling tariff and affiliated refund risk. Howard Lutnick's former firm is brokering such deals, in fact. https://www.wired.com/story/senators-probe-cantor-fitzgerald-tariffs/ https://www.wired.com/story/senators-probe-cantor-fitzgerald...
- foxylad 1y agoI'd be suspicious as hell of any insurer offering cover in the current chaos.