[fire_lake]

This is too simple. Prices float somewhere between cost to produce and value to consumers.

You can’t raise prices beyond value or no one will buy it.

You can’t lower prices below costs (for too long) or you go out of business.

Competition pushes prices down towards costs.

Therefore businesses are always looking for markets with barriers so they can rise prices to value.

Tariffs typically raise costs for all producers, but this only inevitably leads to price increases when competition has driven prices down to near costs.

Unfortunately many staple grocery products fall into this category.

[xvedejas]

The supply and demand curves are not straight lines. There is not one unit price that consumers value a good at, that's why the marginal price that a consumer will pay depends on the quantity produced. The first most eager buyers would pay a higher price than the rest of the buyers you can find at higher quantities produced (but a lower price).

Tariffs eat into consumer surplus and producer surplus not just by raising prices, but also thereby reducing quantity. I think the only times you'd see no effect on consumer surplus via a tax are when the consumers are always going to pay a fixed amount regardless of quantity they can get (perhaps in some budget-constrained scenario), or if the amount of the thing that can be produced is fixed regardless of price; neither of these scenarios describes consumer goods.

[eek2121]

Your argument assumes there is meaningful competition to begin with.

In the case of groceries, a few big companies ultimately control nearly all of it. They know you “need” groceries, so they will happily pass along the increased cost. What are you going to do, stop buying food?

[rsynnott]

Well, also, in the case of groceries, margins are typically very low, due to competition. Large supermarket chains tend to have profit margins in the low single digits; over 5% would be unusual. There’s just very little room to absorb cost increases without raising price.

[Angostura]

> You can’t raise prices beyond value or no one will buy it.

Arguably, that's precisely the aim of some of these tariffs. Price the foreign imports out of the market

[Jtsummers]

Which could work if there were domestic alternatives or the capacity to produce domestic alternatives. The US lacks the apparel manufacturing capacity to takeover from the countries being hit with the current very high tariffs. We also lack the environmental factors to take over growing (ignoring the years needed to get started) coffee and vanilla and many other agricultural products.

[c22]

But isn't value subject to drift (inflation) and couldn't we inevitably expect such drift while raising costs across the board?

[Jtsummers]

Value and price aren't the same thing. Inflation is a change in price, not necessarily a change in value of the things being purchased. This is why when you examine how much something has changed in price you should compare real versus nominal changes.

If you bought your home for $100k in 2000 and sold it today for about $185k, you would be selling it for the same real amount despite the nominal change in price. Its value has not changed in real terms. If you sold the home for $300k, that would exceed the increase from inflation alone and indicate an increase in value (either improvements you've made, the local area has become more desirable, or reflecting scarcity of homes in general).

Or look at your own salary. If your salary is just keeping up with inflation, your employer does not see any increase in value from you over the years. If your salary is dropping relative to inflation, you are, arguably, losing value. If your salary increases faster than inflation, you're increasing in value. (Of course there can also be a lag, the 8% inflation in 2022 may result in depressed salaries for 1-2 years before they catch up. Watch the trend over a longer period of time.)

[c22]

No, I disagree. I think that inflation (on mean) reflects real value that is accrued by an economy.