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Was he actually thinking that those $450 were just gifted by the exporter?
this post was submitted on 26 Jan 2026
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Leopards Ate My Face
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There's plenty of will when a commodity is fungible and margins are high. We can see this in retail prices relative to tariff rates.
When profit margins on a product are high, the retailer is more comfortable absorbing the tariff rate through lower marginal profit. Its on products with lower margins that we're seeing the highest inflation rates.
What's more, as imports rise in price they raise the clearing rate for all products, which encourages domestically produced products to rise in price to match. So you're "paying the tariff" on goods that aren't even being tariffed, because they're chasing rising prices of low margin imports.
More actual work with each month these tariffs linger. There's other factors, of course. The declining value of the dollar is inducing demand for US capital and real estate from overseas, as well as cheapening the cost of US labor. And with three more years of Trump in office (plus the real possibility that we get more MAGA Republicans in years to come) business leadership is inclined to believe a high-tariff / low-tax economy is the future for America.
This makes the US an ideal tax haven. We've been a popular safe-harbor for Chinese, Japanese, English, German, and French billionaires to shield their own wealth from their home countries. And if the EU commits to a uniform income or wealth tax policy, this trend will only continue.
His tariffs have short shelf lives, exceptions, and are constantly rolled back. An index of many goods many of which are not tariffed or haven't been tariffed long enough for domestic supplies to have run out conflated with all other price fluctuations is going to make it hard to tease out individual factors.
You could pick a given item that was continually tariffed for a year and discover unit by unit what actual effect of tariffs was. You would presumably find that broad tariffs on everything as a source of revenue is ultimately 99./9% a tax on the population because whilst merchants are absolutely willing to stockpile domestically to ride out expected temporary hikes and manufacturers may find it important to protect future business. Losing a lot of your margin may be worthy to keep the business you when you expect it to be rolled back 90 days later it is not acceptable as the permanent state of affairs.
This is especially true as rates are high.
This is a boring and tedious way to do it but being unwilling to do it means you probably don't care about getting the correct answer.
He loves to threaten triple digit tariffs, then ratchet them back down to double digits. The average rate on international imports right now is around 14%, compared to 1.5% under Biden. Trump is very seriously and deliberately attempting to pivot the US from an income tax based government revenue model to an import tax model that we haven't seen since Coolidge (a paleocon celebrity since the Reagan years).
Real price increases haven't kept up with the increased tariff rates. If you ever make it through B-school or drop into a few college economics classes, you'll understand why. Retailers maximize profits at the "clearing rate" for their sales goods. That's the retail price which maximizes gross revenues at an optimal marginal unit price.
You can't pass on 99% of a tariff increase if it results in a drop in sales disproportionate to the rise in price. That is to say, if you sell 1000 units for $1 but only 500 unites for $1.15, you are losing $500 in revenue to avoid paying $150 in taxes. Depending on the profit margin by unit (let's say you pocket 30% of the $1 in sales - or $300 on that $1000 gross expenditure) there may be no incentive to pass on the tax to the consumer for your business. In this example, you can either pay $150 on $300 in pre-tax profit or... $150 on $300 in pre-tax profit.
Rapidly changing prices has its own chilling effect on your client base. If consumers see the market price jump 15%, they won't perfectly mathematically optimize their behaviors to match. They'll just blindly cut back on consuming out of sticker shock. Or they'll go hunting for lower rates elsewhere.
The savvier play is one we've already seen across the retail sector - shrinkflation. Reduce the volume of unit sold so the margins stay high but the consumer never suffers sticker shock. A bag of chips doesn't become 15% more expensive, it just gets % lighter.
Nobody has a massive margin to start with to pay for the tariffs. Not just margin on the goods but overall operating margin. Just comparing p:rice of imported goods to tariffs doesn't capture
In the long run the oversimplification that a useful understanding. The idea that we can live off the largess of the foreigners instead of taxing income is a moronic idea that hasn't worked any of the other times its been tried. There is every reason for the long term stable price increase to be most of the cost of the tariff even if this isn't true in the short term in a chaotic environment.