Stalin
Well-Known Member
- Joined
- Apr 4, 2008
- Messages
- 2,317
if you vote for the village idiot ... this is what will happen
"A deeper look reveals how tariffs can foster profit-led inflation, drive up wages, reduce market competition, and destabilize supply chains—all contributing to a longer-term inflationary cycle.
One of the effects of tariffs is their ability to facilitate profit-led inflation. When a tariff is introduced, consumers often expect a proportional increase in prices, believing a 10% tariff should result in a corresponding 10% rise in the cost of goods.
However, tariffs are levied on the import price rather than the final consumer price, meaning that the actual impact on retail prices should be far lower.
For instance, a 10% tariff applied to the import price—often much less than half the consumer price—should translate to an increase of less than 5% at the retail level. In reality, businesses frequently use the imposition of tariffs as an opportunity to raise prices beyond what is justified by the cost increase, padding their profit margins.
UBS analysts point out that this mechanism allows companies to obscure their motives behind the tariff story, leading to inflation that is driven not by higher costs but by inflated profits.
This rise in prices, whether directly from tariffs or opportunistically inflated by companies, often has a second-order effect on the labor market, triggering higher wage demands.
Workers, seeing their purchasing power eroded by higher prices on goods affected by tariffs, are likely to push for wage increases to compensate for the rising cost of living.
more at https://finance.yahoo.com/news/four-ways-tariffs-drive-inflation-084000963.html?fr=sycsrp_catchall
comrade stalin
gaza
"A deeper look reveals how tariffs can foster profit-led inflation, drive up wages, reduce market competition, and destabilize supply chains—all contributing to a longer-term inflationary cycle.
One of the effects of tariffs is their ability to facilitate profit-led inflation. When a tariff is introduced, consumers often expect a proportional increase in prices, believing a 10% tariff should result in a corresponding 10% rise in the cost of goods.
However, tariffs are levied on the import price rather than the final consumer price, meaning that the actual impact on retail prices should be far lower.
For instance, a 10% tariff applied to the import price—often much less than half the consumer price—should translate to an increase of less than 5% at the retail level. In reality, businesses frequently use the imposition of tariffs as an opportunity to raise prices beyond what is justified by the cost increase, padding their profit margins.
UBS analysts point out that this mechanism allows companies to obscure their motives behind the tariff story, leading to inflation that is driven not by higher costs but by inflated profits.
This rise in prices, whether directly from tariffs or opportunistically inflated by companies, often has a second-order effect on the labor market, triggering higher wage demands.
Workers, seeing their purchasing power eroded by higher prices on goods affected by tariffs, are likely to push for wage increases to compensate for the rising cost of living.
more at https://finance.yahoo.com/news/four-ways-tariffs-drive-inflation-084000963.html?fr=sycsrp_catchall
comrade stalin
gaza
