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Six months into tariffs, businesses have no idea how to price anything

(www.wsj.com)
462 points JumpCrisscross | 6 comments | 30 Aug 25 20:56 UTC | HN request time: 1.378s | source | bottom
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jameslk ◴[30 Aug 25 21:44 UTC] No.45078256[source]▶
> Repricing, though, isn’t as easy as changing a tag—in part because suppliers and big-box stores are engaged in an epic tussle over who will pay what.

> Retailers, including Lowe’s and Home Depot, buy Thompson Traders’ wares and set the retail price themselves. And they have been reluctant to pay Thompson Traders more.

It seems like this sort of scenario would benefit from some kind of risk protection, like insurance, or a futures market

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brutal_chaos_ ◴[30 Aug 25 21:52 UTC] No.45078316[source]▶
So more middlemen to make the cunsumer pay even more, joy.
replies(1): >>45078359 #
jameslk ◴[30 Aug 25 22:00 UTC] No.45078359[source]▶
Consumers will pay more regardless in this type of circumstance. But they will pay less if businesses don’t suddenly start going out of business, eliminating competition and jobs
replies(1): >>45078624 #
Braxton1980 ◴[30 Aug 25 22:44 UTC] No.45078624[source]▶
Doesn't insurance normally work by protecting rare instances whose cost is amortized over the base?

This would be a claim by a large amount of insurance clients at once

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jameslk ◴[30 Aug 25 23:24 UTC] No.45078899[source]▶
A sudden claim against many should be priced into the cost of the insurance, offset by some risk adjustment. The goal is ultimately price stability, if the price is not too high (that’s the unknown)
replies(1): >>45079342 #
1. lazide ◴[31 Aug 25 00:47 UTC] No.45079342[source]▶
Insurance tends to do really badly in ‘black swan’ type situations. Which pretty much are what Trump is doing.
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2. jameslk ◴[31 Aug 25 01:57 UTC] No.45079646[source]▶
Isn’t the point of insurance to provide protection against black swan events? If it’s more likely to happen then it’s not really a black swan?
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3. lazide ◴[31 Aug 25 02:32 UTC] No.45079829[source]▶
No [https://en.m.wikipedia.org/wiki/Black_swan_theory].

It’s the difference between getting cancer (calculable, but perhaps not high probability), and getting hit by a meteorite (not actually calculable, very severe consequence).

4. adgjlsfhk1 ◴[31 Aug 25 05:25 UTC] No.45080588[source]▶
insurance is best for individually unlikely but societally likely items. otherwise pricing it is really hard.
replies(1): >>45081670 #
5. hdgvhicv ◴[31 Aug 25 09:07 UTC] No.45081670{3}[source]▶
Fire burns your house down, insurance is easy.

Asteroid hits New York, insurance won’t pay out.

replies(1): >>45083165 #
6. lazide ◴[31 Aug 25 13:54 UTC] No.45083165{4}[source]▶
Or in many of these scenarios, can’t pay out, because they’re bankrupt. The biggest issue with black swan events (in the proper usage) is everyone is screwed because no one saw it coming and/or it’s so widespread no one can do anything about it for individuals.