If Trumps tariffs go thru would that not cause the countries the tariffs are imposed on just raise their prices? And a result of that hurt the american consumer? Why do it to begin with?
If Trumps tariffs go thru would that not cause the countries the tariffs are imposed on just raise their prices? And a result of that hurt the american consumer? Why do it to begin with?
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Okay, that's not how tariffs work, a tariff is just a tax on a foreign good that american companies have to pay when they bring that good into the country.
Let's say that a vacuum cleaner costs 100 dollars, a 25% tariff is a 25% tax that the company that brings that vacuum cleaner into the country has to pay. That company still wants to make a profit, so they raise the price by 25 dollars.
It's american companies that pay tariffs, and that extra cost gets passed on to the consumer. The reasoning behind it is that as foreign goods become more expensive consumers will want to buy more american made products. (This is a huge oversimplification)
So yes it does hurt american consumers, and it will make stuff more expensive. Most actual experts say that these tariffs make no sense economically.
However, Trump wants the tariffs because they look good politically, and he's willing to make things more expensive if it means people will vote for him.
TLDR: Tariffs will make stuff more expensive, but they're popular.
That company still wants to make a profit, so they raise the price by 25 dollars.
Or they raise the price by $40, do stock buybacks, lay off 10% of their workforce, close underperforming stores, and book their CEO on CNBC to squeal about "organized retail theft," and pay record bonuses to the execs.
You also just explained the last few years of inflation.
We spent a year forcibly shutting down small businesses and printing new money. That easily explains the inflation.
Bad bot
Actually if that company really wants to make money, they raise the price by $10000000000
They'll want to make the same profit margin (if they aren't changing the way they do business) so if the margin is 10% the price would go up 27.5 dollars in your example.
Wait, is my math right?
Actually they’ll want to make more profit margin. They want to make as much profit margin as possible.