US retail giants raise prices due to tariffs
87 comments
·August 26, 2025layman51
baron816
In a sane political system, we would’ve raised taxes (across the board). That would’ve slowed down consumption and allowed the Fed to lower interest rates, which would’ve raised investment. It also would’ve reduced the deficit, which would also be good for long term economic health.
Instead, we blew up the deficit and lowered taxes (but only for the really rich).
So many problems and social angst is downstream of expensive housing. Higher interest rates, fewer laborers, and more expensive building supplies (due to tariffs) is just making the housing crisis worse.
Oh and just wait until the Fed’s independence is completely gone. Our economy is galloping towards Peronism. Favored groups get economic benefits. Inflation is out of control. Competitiveness is gone. Capital flight. Rapid erosion of quality of life. It won’t be fun.
tastyfreeze
What a wonderful success the Federal Reserve redefinition of "inflation" has been. We will never get anywhere if everything that causes price increases is called inflation. Inflation is an increase in the money supply which also happens to increases prices.
Everything has trade offs. Diluting the dollar increases prices for nothing in return. Pretty much all downside for everybody but the top. Tariffs increase prices to the benefit of domestic producers and benefits everybody.
What we will see is if prices are more important than building skills and wealth of our fellow citizens.
jaredklewis
> Inflation is an increase in the money supply which also happens to increases prices.
This is not a definition I have seen used by academic or working economists. If the purchasing power of $1 decreases, we can say there has been inflation. Even if the money supply is constant, if shirts used to cost $10 but now cost they cost $100 due to increased demand, a supply shock, a union strike, a tax, or a speculative shirt buying bubble, it would be considered inflation in all of those cases, regardless of the cause.
It sounds like you mean monetary inflation, but the fed’s mandate is not to control monetary inflation (which would be a lot simpler) but to ensure stable prices. The mandate has no exception for non-monetary causes of price instability.
Of course measuring how much a dollar can purchases is an enormously complex and subtle task that can be approached in many different ways. But the whole argument for tariffs is that foreign producers of goods are selling them so cheaply that American producers cannot compete. So if we increase the price of those foreign goods by adding a tax on it and shift some good consumption to more expensive American producers, that’s obviously going to reduce what a dollar can purchase.
kergonath
> Tariffs increase prices to the benefit of domestic producers and benefits everybody.
Not necessarily, and there are plenty of examples around the world of tariffs that do not do that, but instead cripple the economy. Tariffs are just one aspect. If the domestic supply is not there for one reason or another, you have the worst of both worlds, with high prices and still no re-industrialisation.
You need companies to be reasonable confident that they’ll be making money next year, and you need the situation to be stable enough to let people invest to make it happen. You need those people to be confident enough that they won’t just be crushed by a president’s friend who has more access to power than they have. You need rule of law and due process. Not a kleptocratic oligarchy.
Otherwise you’re just sawing off your leg to repair a broken ankle.
analognoise
> Tariffs increase prices to the benefit of domestic producers and benefits everybody.
I think tariffs are a regressive tax brought on by the most economically illiterate administration in living memory.
> What we will see is if prices are more important than building skills and wealth of our fellow citizens.
So instead of it being on the shoulders of the “wealthy job creators” who definitely earned it all fair and square and should keep every penny, it’s now on the poor and the average citizen?
These are just regressive policies that lead to outright social unrest , and a horrific distribution of wealth.
mlinhares
Wait, Lutnick said tariffs would lower the prices, this can't be real.
janice1999
If only he could seek the financial wisdom of the former owner of his home and his long time neighbor, adviser to the rich and powerful, high school drop out Jeffrey Epstein.
analognoise
Obviously we trusted the economic prowess of the author of “The Art of the Deal”, the convicted felon who bankrupted a casino and should have been barred from running for his actions on J6.
I’m glad we’re all in such tiny, bruised, felonious hands.
platevoltage
You don't trust that smile?
pandemic_region
That was Fake News I'm afraid.
Incipient
If you have two competing providers, technically one could reduce margins to wear some of the tariff to out compete their competitor. Even if that DID happen, chances are wallmart etc would STILL put up prices, blame the tariffs, and just enjoy a higher profit margin.
Essentially even in an unrealistically optimistic position, the consumer will STILL get stuck with higher prices.
thelastgallon
Retailers can add mandatory tips!
thisisit
I always surprised that people defending these tariffs don't see the conflicting defenses.
The default defense comes from Trump who has - since 1980s has pushed for tariffing other countries to raise government revenue. The idea being - America drives lot of market demand. This seems to ignore basic economic facts. Importers pay tariffs and also that corporates are all about profit maximization.
Companies might eat some of the tariffs in short term but they will always reduce costs in long term. That means jacking up prices slowly, finding ways to circumvent tariffs, using low cost - maybe even harmful but unbanned substitutes in products to name a few. Even the domestic company has a reason to hike up prices just below the price of imported goods. And also, because there is less competition domestic company might even reduce R&D because they can continue to rake in profits from local markets.
The second defense is around domestic companies. I don't think anyone will disagree that each country needs to protect its most crucial domestic industries. But in those cases tariffs ae a precision tool, not a hammer. Tariffing everything doesn't make sense except it goes back to original defense - the point is to raise revenue.
shmerl
Tariffs are essentially just a sneaky way to tax the consumer who ends up paying for this.
randunel
Sony actually made Europeans and Australians pay for US consumers' tariffs. They raised prices everywhere else to keep US prices unchanged.
Congeec
Not true for camera gears in the US https://petapixel.com/2025/05/19/those-rumored-sony-price-in...
Also, lo, PS5 https://www.reddit.com/r/PS5/comments/1my6t3o/sony_discounts...
esalman
That's cute, so are they eating the tariff costs yet?
null
shmerl
It ends up working like the sales tax. Officially it's the seller who is obligated to pay it, but it's the buyer who ends up paying it anyway.
kjkjadksj
They were very recently announced to go up for the US PS5 as well.
esalman
Yes, as soon as the inventory runs out.
senectus1
lol.. hampering the sales globally so that you can look good to the man-child emperor.
Remember future contenders... bribery is legal now.
Guthur
It has been legal for quite some time, why do you think companies and high worth individuals provide so much money to the political elites, and quite often to both sides. It's just that Trump is quite vulgar and has thrown out any pretense, but they were all quite guilty.
hn_throwaway_99
Are they really that sneaky? Literally every economist who's not trying to give Trump a handy says this is the obvious outcome of tariffs (heck, the entire way that tariffs protect native jobs is by making foreign goods more expensive so native goods, which are more expensive to produce due to higher labor costs/lower productivity, are competitive).
Saying stuff like "China will pay the tariffs" was always bloviating fantasy to anyone who can stitch 2 brain cells together to make a coherent thought.
shmerl
Sneaky in the sense that it was sold to the masses as not being being a tax on them, while it very practically is.
You'd think this is obvious, but you'd think people wouldn't vote for such ones either in the first place.
rayiner
The Obama folks were correct about demographics being destiny: https://www.politico.com/blogs/politico44/2012/07/demographi.... Mass immigration killed the Mccain/Romney GOP. What they overlooked is that, the vacuum would be filled by a right wing party that looks more like the right wing parties you see in the rest of the world.
Trump, with his lying and outright vote buying (No Taxes on Tips) is the kind of right wing candidate that can win enough immigrants to be nationally viable. Blue Rose research estimates Trump tied with naturalized citizens. Little Bangladesh in Queens swung 50 points to the right from 2020. Populist rhetoric unrooted in facts is really popular among third world voters.
seanmcdirmid
A lot of Muslims voted for Trump as a protest against Biden’s support for Israel. They just didn’t realize that Trump’s solution to the Gaza conflict would be to turn Gaza into a resort without Gazans.
docdeek
>> Trump, with his lying and outright vote buying (No Taxes on Tips) is the kind of right wing candidate that can win enough immigrants to be nationally viable.
Harris took the same position on 'no taxes on tips'. https://www.bbc.com/news/articles/clyn511dgnjo.amp
JKCalhoun
So regressive…
rayiner
The economic incidence of tariffs (like any tax) depends on elasticity. But yes, in general, some portion of the tax will be passed onto consumers. So what? Economists agree that taxing consumption is better than taxing income or capital gains: https://www.npr.org/sections/money/2012/07/19/157047211/six-... (points 3 and 4).
A tariff is a consumption tax that’s less than 100% passed onto consumers, which has the effect of discouraging imports. All good things.
hn_throwaway_99
It's a giant pet peeve of mine when people post a link that very superficially backs their argument, but then when you go and read it, it directly contradicts their point. Critical sentence from point 4: "Instead, impose a consumption tax, designed to be progressive to protect lower-income households."
Tariffs are the exact opposite of that, they're highly regressive.
JKCalhoun
How do you design a progressive consumption tax? Tax only private jets and yachts?
Wondering why raising higher-bracket income tax is such a problem.
shmerl
Exactly. Unlike income tax, tariffs don't depend on income.
shmerl
It's not about so what, it's about how many are brainwashed not to understand the obvious thinking they'll get tax reductions, while they are getting tax increases in practice. Same ones elected these people in the first place.
platevoltage
better for whom exactly?
mindslight
ah yes, raising taxes is great when Dear Leader does it. You do realize you've got about three years until you're waxing eloquently about the virtues of eating the bugs, right?
King-Aaron
I'm frankly stunned that there is an argument in the US about "who pays for tariffs". It's like dictionaries don't exist or something. The literal definition of the word reveals who the tax is effectively applied to.
jader201
You’re applying a literal definition, but in practice, it can be different.
For (a simplified) example, if there’s a 30% tariff on a $100 item, all else equal, the price is now $130, and the customer that originally would have paid $100 is now paying $130.
But what can — and I’ve experienced firsthand — happen, is that the US retailer will eat some/all of the tariff in order to not lose the customers business (or even just out of goodwill).
Also, the foreign supplier can do the same thing. Rather than lose the business of the US retailer, they may, in turn, eat some/all of the tariff.
I’ve seen both of these happen with products I’ve purchased over the past few months.
I’m not saying this happens a lot, but I don’t know that it doesn’t, either.
I’m just saying that it’s not as clear cut as the definition.
King-Aaron
The supplier absorbing the tariff isn't sustainable, they will always ultimately pass the cost on to the consumer one way or another. And your $130 example still demonstrates that the consumer just ends up paying more.
The whole idea is to dissuade the consumer from buying a foreign product, and choosing a domestic one instead. But if there is no domestic alternative, then it is always just going to be a case of "pay more or don't have it".
Anyway I just think everyone in the US are very silly for allowing this to happen. Very silly indeed.
dfee
Are you European? https://archive.ph/qrLFg
You see, tariffs are a tool. They’re protectionist. And when other countries distort markets, importers often respond this way.
jader201
> The supplier absorbing the tariff isn't sustainable, they will always ultimately pass the cost on to the consumer one way or another.
I’m not arguing that it is. But passing the price on to the customer isn’t necessarily sustainable either.
And to be clear, I’m not arguing in favor of tariffs. Just saying that, in practice, it’s not always “suppliers and retailers still get their money, and the customer pays 100% of the tariff”.
> And your $130 example still demonstrates that the consumer just ends up paying more.
That example was the case when it does follow the definition. The exceptions that followed that were when it may not.
> The whole idea is to dissuade the consumer from buying a foreign product, and choosing a domestic one instead.
Not just the customer, but the retailer or manufacturer getting goods/parts from foreign suppliers.
> But if there is no domestic alternative, then it is always just going to be a case of "pay more or don't have it".
No argument, there. I’ve already seen some small businesses make the tough choice to close their doors because of tariffs.
troupo
> But what can — and I’ve experienced firsthand — happen, is that the US retailer will eat some/all of the tariff in order to not lose the customers business (or even just out of goodwill).
Please show me retailers that have 30%+ margins that let them happily absorb all of the tariff. Walmart's margin is 3-4%.
Even if they absorb just some of the tariff, it means the customer still ends up paying more.
spankibalt
You obviously didn't get the memo: Dictionaries are woke.
King-Aaron
With the way old Donald wants to rewrite history in the museums, it wouldn't surprise me if dictionaries were next.
spankibalt
My comment was about the intellectual aptitude of Trump's most vocal fans... and therefore easiest marks.
bananapub
it really is striking how pathetic almost all elites in the US have turned out to be, and in particular, almost all business leaders.
why is there ~zero prominent CEOs/managers on tv explaining how turning US trade policy in to a personalised autocracy of one senile old man is Bad, Actually?
ZeroGravitas
Because he'd destroy them one by one.
They'd need to collectively form some kind of union to fight that power imbalance.
Which they know from being on the other side of that dynamic.
ea550ff70a
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ch33zer
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platevoltage
Nah, They just need to do the Tim Cook special and give him a nice little gold trophy for his mantle.
kenjackson
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conception
They are actually getting exactly what they want unfortunately. It’s a fairly well documented phenomenon, and I admit I used the gpts to hunt for the study so apologies for the slop forth coming but the studies are real -
A classic, directly on point study is:
Tajfel, H., Billig, M., Bundy, R., & Flament, C. (1971). “Experiments in Intergroup Discrimination.” In these “minimal group” experiments, people randomly split into trivial groups repeatedly chose allocations that reduced their own group’s absolute payoff as long as it increased their advantage over the out-group. In other words, participants accepted worse outcomes for themselves to ensure the disliked/other group got it even worse. https://ia902305.us.archive.org/23/items/15341_Readings/1534...
If you want an economics variant showing the same logic at the individual level: • Zizzo & Oswald (2001), “Are People Willing to Pay to Reduce Others’ Incomes?” Participants literally paid to “burn” others’ money—taking a loss themselves to make others worse off.
https://warwick.ac.uk/fac/soc/economics/staff/ajoswald/final...
As long as whoever they’ve been told is the outgroup, and that group is getting hurt, they will literally pay for that out of their own lives .
kelseyfrog
I wonder if this applies the other way too, like how people care more that billionaire wealth outpaces their own despite their standard of living steadily marching up?
bawolff
I suppose its kind of like war. You pay a ton of money on weapons and such in order to shoot them at your opponent. Everyone loses.
hn_throwaway_99
The religious devotion of many evangelicals is really quite an astonishing feat IMO (though not necessarily surprising). Trump essentially embodies everything that Jesus warned about in the Bible, and yet most evangelicals think he is the closest thing to the second coming.
autoexec
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stock_toaster
> The fanaticism and cult of personality seems unusual for a living figure though.
Covid, both the disease and/or the isolation of lockdown, did some weird things to several people I know -- they just didn't come out the other side the same person. Coupled with social media and what seems like a global rise of nationalism fervor, the outlook doesn't seem good.
autoexec
There's a growing amount of research on cognitive changes/decline following even mild covid infections. I think the realization that governments were so incompetent in handling a crisis and also fully willing to let people die for nothing didn't help either. Especially in those people who tend to be more fearful and less trusting in general. Fear and insecurity don't lead to people making the best choices.
This reminded me of an earlier headline I had read about "16 Nobel-Prize winning economists signing a letter saying that the economic policies put forth by the Republic party would ignite inflation again".