Price shocks are arriving thanks to the tariffs. Trump has ordered retailers to “eat the tariffs” in a panicked response.
Trump’s tariffs are causing massive amounts of economic damage around the world, though the ones feeling that damage the most is, of course, American’s. The tariffs have already caused what felt like an endless string of stock market crashes and a probably recession that has also spilled over into Canada as well.
It goes without saying that Trump’s tariffs has caused significant damage to the overall US economy – damage that ultimately didn’t need to happen, but Trump was too stupid to understand the consequences of his own actions. The net effect of Trump being a complete and total idiot is the fact that the tariffs are going to cause the prices of everything to go up. Whether it is common food items or electronics or video games, basically, the cost of everything is going to go up. The side effect being, of course, that inflation is going to start rising as well, compelling interest rates to go up as well, potentially causing stagflation to hit as well.
Of course, the problem with all of this is that many average every day American’s aren’t necessarily feeling the full effects of the tariffs. Prices continue to remain the same and business for a lot of American’s continues on. One exception to that is the layoff notices that are likely piling up across some businesses, but really, that is more foreshadowing of things to come for the broader population.
When these tariffs will really be felt is when the inevitable price shocks finally hit. When the tariff costs are incorporated into the price is when American’s are going to more vividly feel the full effects of the tariffs. We sort of saw that foreshadowing of things to come when Trump thwarted a transparency attempt by Amazon to showcase the price of the tariffs on the cost of goods on some services (a story that had a lot of curious turns as some parts of the story by others turned out to not really be accurate as we noted in our write up at the time). Still, it hinted at how Trump was going to react when retailers in all sectors are forced to deal with Trump’s idiocy on the individual transaction level.
More foreshadowing of things to come came in the form of reports about how much in goods are being shipped. Reports surfaced not too long ago about how shipping was down and the last shipments that made it under the wire for Trump’s tariffs are already arriving. These reports were followed up by additional reports that the first containers affected by Trump began arriving. While some retailers were able to stock up on not tariffed goods, a number of products out there have expiration dates – food being a great example of this. Either way, people in the shipping industry were witnessing the impending price shocks across the economy coming down the pipes. Naturally, the far right denied this, saying that all of this is just typical media lies and that it’s other countries that pay for the tariffs, not the US (not how any of that works).
The real question here is exactly when those price shocks start appearing at the store shelves. Recent reports suggest that those prices have already started appearing. From the CBC:
A trip to the store is about to become more expensive for shoppers on both sides of the 49th parallel, as pre-tariff inventory runs out at Loblaw stores, and Walmart is set to raise prices in the U.S.
Loblaw Cos. Ltd. chief executive Per Bank said Wednesday in a LinkedIn post that the number of tariff-hit products at the grocery store could soon spike, as products brought into Canada before the trade war began are bought up from store shelves, which means prices for some items will go up, too.
Meanwhile, Walmart said it must raise prices in U.S. stores due to higher costs from tariffs implemented by U.S. President Donald Trump, after announcing its first-quarter profit slipped.
Loblaw has been aggressive in marking which products are affected by tariffs, a tally it has so far limited to a little over 1,000 items. But that total will rise to more than 3,000 within the next week or two, and could peak at over 6,000 within the next two months, according to Bank’s post.
“While the tariff situation might be improving between the U.S. and other countries, that’s not yet the case here in Canada. In fact, we’ll be facing a large wave of tariff-related increases in the weeks ahead,” he said.
It may be one thing to order up as many pieces of technology and stock up as much as humanly possible so that you can keep prices low for as long as humanly possible, but it is much more difficult to do things like that for an orange or a lemon. The best you can hope for is putting such product in freezers, but even that has a limited shelf life. What’s also tricky is doing that for a product that hasn’t quite hit the market yet. Something like a Nintendo Switch 2, which is set to release next month, will probably feel the full brunt of those tariffs in the US because it is pretty difficult to stock up on something that has, at best, limited supplies since it is only just about to hit the markets.
At any rate, as pre-tariff supplies inevitably run out for more and more products, price increases are basically not a matter of “if”, but “when”. It’s basically the consequences of Trump’s actions playing out. Perhaps what isn’t surprising is that Trump is reacting in the same way he reacted to Amazon when they suggested that they would be forthcoming how much consumers are paying just in tariffs. He wants consumers to not notice what he is doing. So, in response to the reports of price increases beginning to reach consumers, Trump ordered companies like Wal-Mart to “eat the tariff” costs. From Reuters:
U.S. President Donald Trump said on Saturday that Walmart should “eat the tariffs” instead of blaming duties imposed by his administration on imported goods for the retailer’s increased prices.
His comments were in response to the world’s largest retailer saying this week it would have to start raising prices later this month due to high tariffs.
“Walmart should STOP trying to blame Tariffs as the reason for raising prices throughout the chain. Walmart made BILLIONS OF DOLLARS last year, far more than expected,” Trump said in a social media post.
“Between Walmart and China they should, as is said, ‘EAT THE TARIFFS,’ and not charge valued customers ANYTHING.”
As American’s with half a brain has known all along, tariffs are a tax on American consumers. What is also inevitable is that American consumers end up footing the bill in all of this. The reason why this affects Canadians is because a lot of goods end up being routed through the US before making their way into Canada. Sometimes, it is for manufacturing reasons, but other times, it’s just how the supply lines are set up. Either way, there are multiple reasons why Canadian’s will feel some of the spillover effects of Trumps stupidity.
In a way, this is just another admission that tariffs cost domestic populations. In a normal world, the president can do diddly squat when it comes to the price of consumer goods in the immediate short term. For Trump, however, he’s probably looking at finding ways of retaliating against various retail giants because they are simply operating under market conditions. I don’t know if that involves arresting executives or holding another witch-hunt style hearing within Congress, but I know he’s probably trying to line up some shenanigans when the consequences of Trump’s actions finally become a reality.
Still, the fact that Trump is ordering Walmart to “eat the tariffs” seems like an admission that the tariffs are costing American’s and not other countries. This is obvious, but it is amusing to see that Trump indirectly admitted that his critics are right.
I know some out there are going to chime in and say that Trump has rolled back the China tariffs, but that was only a rollback from 145% to 30%. The tariffs haven’t gone away completely. It just means that those pair of shoes that originally retailed for $100 is going to retail for $130 instead of $245. While the former price is better, it’s still higher than the original price.
At any rate, it’s going to be extremely difficult for Trump to try and clamp down on the price hikes he ultimately caused in the first place. As was clearly demonstrated in his post, he’s going to try, but like so many of Trump’s businesses, it’ll probably fail.
