[somenameforme]

Retailer's prices are not set to be "fair", they're set to maximize their return on the supply vs demand curve. In other words, increasing prices will generally cost them money, rather than make them money. In other other words, they expect that if they charge 5% more, they will trend towards selling 6% less.

So in general they end up stuck between a rock and a hard place in a situation like this. The most logical path forward would be to work on supporting domestic supply chains, not subject to tariffs, and helping them to gradually reduce prices through increasing both volume and efficiency.

But the problem that concept runs into is that there's about a coin's flip chance that in 3 years these tariffs will simply be reversed. And any domestic suppliers that were relying on them for a competitive edge will simply be left buried. It thus discourages any sort of meaningful investment in these domestic providers.

[AnthonyMouse]

Retailers typically have thin margins, e.g. 2%. They're paying $0.98 to sell something for $1 so they can keep $0.02. Not all of the $0.98 is imported products (a lot of it is salaries and rent etc.), so a 10% tariff might only raise their costs by 5%. But then they're paying $1.03 to sell something for $1. Do they care more about maintaining their volume at that point? Of course not, they're going to raise price instead of making a loss. But so are their competitors, because their costs went up too, which prevents them from losing sales to the competition anyway. Then they only lose sales to customers being unable to afford it, e.g. because they have to spend more on food and then have less to spend on new cars.

This is true of most taxes in a competitive market. Competition was keeping margins low so the money has to come from higher prices or lower salaries, and salaries are sticky so it's usually higher prices. So if the tariffs are instead of some other taxes, it's just a revenue-neutral tax change, not inherently raising prices. But if the tariffs are on top of other taxes then it's a tax increase which gets passed on as higher prices.

[somenameforme]

Food is about 90% domestically produced [1], so tariffs are inconsequential there. The things that are going to be largely affected by tariffs are things like imported electronics, furniture, and so on.

The tariffs are primarily hitting the discretionary sector of products, which means people can simply stop buying them. There's also product replacement as an option. For instance the next time somebody's coffee maker breaks they end up buying a French press only to discover that not only is it way cheaper (no filters!), but it never breaks and makes way better coffee anyhow! (Pro Tip: don't use boiling water)

[1] - https://www.ers.usda.gov/data-products/charts-of-note/chart-...

[dendrite9]

Coffee and chocolate are not domestically produced, nor are bananas which are like the potatoes of the fruit world in terms of how productive they are.

There are lots of nondiscretionary products that take a while to flow through to the point you notice them. The parts to repair the machines that make things for example. Or at a low level, the inserts used in mills to make things out of metal. There are other inserts available, but they aren't as good so they need replacement more often.

[somenameforme]

There actually are already domestically produced coffees in America! And if other coffees end up forced to significantly raise costs, that would increase the market share and production of these coffees. It could end up being a major economic boon to places like Puerto Rico. The link I mentioned also covered non-domestic inputs, and not just final products. It's about 4.7%.

The lion's share of imports are going to be alcohol and purchasing produce outside of season.

[dendrite9]

It seems unlikely that we can grow enough coffee in Puerto Rico and Hawaii to make up for the difference. It might be good for those producers though.

Do you mean the lion's share of food imports or imports in general? Lots of seafood is processed elsewhere and imported the US. Strangely it appears ground beef is imported to the US even though we are a net exporter of beef.

[troupo]

> There actually are already domestically produced coffees in America

From American coffee beans? At enough quantity to cover the US market?

[JumpCrisscross]

> Food is about 90% domestically produced [1], so tariffs are inconsequential there

Prices are determined at the margin. Domestic producers suddenly have less foreign competition. That lets them raise prices. (Which is what we’re seeing, though not at an accelerated rate to what food prices were doing in ‘24 [1].)

[1] https://fred.stlouisfed.org/series/CPIUFDNS

[adgjlsfhk1]

food is largely domestically produced by foreign workers who are being deported.

[_carbyau_]

> Retailer's prices are not set to be "fair", they're set to maximize their return on the supply vs demand curve.

I would add to that statement the context of the market and competitors. Even if retailers east some % of cost increase, this is still a pretty large price increase pressure.

Fair point regarding possible tariff reversal effect on industry investment!

Rock <-USA-> Hard place. At least deflation is not going to be an issue...