Comment by fzeroracer
8 days ago
Well, the unfortunate beauty of touching the incredibly hot stove of Tariffs is that the pain is immediate and obvious. So assuming that these tariffs go through as is, we'll immediately launch into one of the worst recessions we've seen with price increases unlike anything Americans are used to.
A tariff of some +x% doesn’t cause a +x% increase in retail prices. The ratio is somewhere between 2:1 and 10:1 for most products, depending on the markup, local value add, taxes, etc…
The real damage is business uncertainty, inefficient capital allocation, etc… all of which takes years to fully impact the economy.
Uncertainty will be priced into the price of things moving forward, I’ve already started adding 10-15% to my BoM over today’s prices to account for the possibility of future price increases and I’m definitely not the only one.
This is only true in the ordinary situation of using tariffs. Such as targeting specific markets or exports in order to bolster the local market.
Tariffs on literally everything have an immediate outsized impact as businesses need to rapidly readjust and renegotiate prices on everything. Not only that but there's the second order effects too, such as Trump's interactions with Canada resulting in destroying tourist and seasonal travel from up north to the border states.