Here is a Tariffs Thread

Actually …

Those higher prices began to appear on Walmart shelves in late April and accelerated this month, Walmart executives said Thursday. However, a larger sting will start to be felt in June and July when the back-to-school shopping season goes into high gear.

“We’re wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter,” Chief Financial Officer John David Rainey told The Associated Press on Thursday after the company reported strong first-quarter sales.

Rainey emphasized that prices are rising not just for discretionary items such as patio furniture and trendy fashions, but for basic necessities as well. The price of bananas, imported from Costa Rica, rose from 50 cents per pound, to 54 cents.

https://www.wltx.com/article/news/nation-world/walmart-to-raise-prices-tariffs/507-6e315322-4d93-486c-9299-c57eff387a7c

How convent that you left this part out

Tariffs on countries like Costa Rica, Peru and Colombia are raising costs on groceries like avocados, coffee and roses, in addition to bananas, company executives said. Walmart is absorbing costs on general merchandise within departments and has yet to pass along rising costs in some cases.

And just like that

As to the above.

With Presdient Trump using a spaghetti-to-the-wall approach to tariffs (which could be a very good thing if he used a differnt approach) it is hard for business leaders to plan anything.

But according to current plans,
the “protectionist” factor of tariffs appears to be leading, corporate leaders and Wall St analysts now expecty better revenues and better profits than they anticipated prior to Liberation Day.

How can this be?

How can this be?
Because tariffs and tariff threats sometimes work.

American industry is not awful,
and American workers are neither lazy nor overpaid.

When our products can compete on a level playing field
our products can sell. American industry wins. American workers win.
.
.
.
.
(That said, we really don’t know how all this on-again, off-again stuff will work out in the long term. The tariff idea is a good one. The approach, mmm, not so good.)

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Does this have anything,to do with tariffs? Not sure.

“General Motors Co. plans to invest $4 billion to move production from Mexico to three plants in the United States, including its shuttered Orion Assembly plant in suburban Detroit, three sources familiar with the situation told The Detroit News.“

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Not only is inflation tame
many of the areas where we would expect tariff-related inflation actually have negative inflation (deflation, not just disinflation.)

CPI +0.1%
Core +0.1%
_____🍲Food +0.3%
_____⛽️Energy -1.0%

Core goods +0%
_____🚗New -0.3%
_____🚘Used -0.5%
_____👕Apparel -0.4%

As I have said many times taiffs can be inflationary or deflationary,
and what little evidence we have suggests the 2nd one is more likely.

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:blush: indeed

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I’m behind; are you saying tariffs can be deflationary because of the non-uniformed way it influences buying behavior? Example higher price of toys from China equals buying more digital entertainment like computer games.

Yes, that is what I am saying.
It has been decades since I studied it formally, but I think I recall there are THREE different ways tariffs can be deflationary.

The main one has to do with the substitution effect.
EX: iPhones (and aluminum and steaks) are in high demand so they are “bidding war” goods.

Place a blanket 30% tariff on them and buyers switch out completely and instead buy Android phones and plastics, and Ramen noodles which are not price-sensitive."

These three substitutions each result in net lower prices.

I see I over-complicated that (go figure). The point is one of the three effects that can make tariffs deflationary happens when people substitute with cheap alternatives.