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So you're telling me corporations shouldn't be able to fix their own prices?
What's next? Capitalism is no fair economic system and the invisible hand of the market exists only in the wildest fantasies of the most gullible free market-stans??
Unconscionable, I tell you, unconscionable!! Sooner rather than later you'll be spouting out socialist propaganda!!!
If the teriffs burden exceeds the profit margin, which in most cases related to recent US discussion it does, if companies don't raise prices they'll be selling at a loss. No amount of corporate belt tightening can save you, even if there was an appetite for that, which there isn't anyways.
Does the profit margin in your example include obscenely large executive salaries?
Yes. By the time those come down to a per-unit cost, they're something for sure, but nowhere near as large of a factor of cost of materials.
Again, if we were talking a 5% cost increase in raw material input, then the ratio between additional unit cost of materials and unit cost executive salary would at least be closer. But we're talking terriffs that are STARTING at 25% and god knows who'll say the wrong thing to cause them to jump to 50 or 100.
As exorbitant as they are, you are probably underestimating the volume of production and so overestimating the per-unit cost of those salaries.
Ford, for example estimated a 25/10 teriff on steel/aluminum would add 1.6 billion to input costs in 2017. Now we're looking at 25/25 so, I dunno, 2 billion per year (2025 dollars)
You could cut all executive pay at Ford to 0$ and you'll still be in the red by like 1.8 billion.
My understanding is the importer pays the tariff to the border force. The seller is not involved in the transaction.
Your suggestion would be for an exporter to give Americans a cheaper price than everyone else based on something that happens following the sale.
Edit: happy to have it explained to me how I'm wrong if I am, I'm not gonna pretend I've got a perfect knowledge of how the American border works
You are correct. The importer pays it
Are you saying tarrifs at any amount will allow for companies to make a profit? I mean trump has been throwing around 100 and 200 percent. Do you understand profit margin and how its different for different things?
When the VAT was increased from 24% to 25.5% my accountant said that I need to raise my prices to compensate for it. I didn't and nothing bad happened. I can deal with losing 15 euros of every 1000 I earn.
You do understand that 1.4% is a much lower number than we are currently talking about, right? Other than that, I applaud your willingness to take your customers into consideration
I don’t think people are comprehending this. He’s talking about a change of 1.4 and what we are dealing with is 25% or 50% increase. Just a bit of a difference. Very few companies can absorb that kind of a financial hit.
But if you’re a public company, it’s much harder to take the high road when it means missing potential profits. Especially when you have damn near a monopoly on markets. It’s the literal cancer to this society.