this post was submitted on 10 Mar 2025
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Explain Like I'm Five
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The answer is in between depending on profit margin and market conditions...
If nobody buys your shit for 1.50... You will be forced to eat the profit margin
I think you'd be surprised at how many businesses don't like any sort of income loss. So the consumer pays the full tariff every time. The lemonade is now $1.50
If demand is inelastic... Sure... Food rent gas
But people can easily either not buy or find a substitute for lemonade lol... That's bow free markets generally work
Electronics can be used until they break!
Non tariff lemonade is $2 because it's local and "organic". And it's not gross Commie lemonade.
More than 50% of consumer spending in the US is done by top 10% of the income bracket. They are willing to pay that extra $1.50 because they're also the people who own the domestic manufacturers that are reaping massive profits by raising costs commensurate with the tariffs but not having to actually pay the tariffs.
Maybe they lose a little business from low income consumers, but they don't care that much because they make it up from the higher sale price to higher income consumers. The poor get fucked.