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

(www.wsj.com)
462 points JumpCrisscross | 4 comments | 30 Aug 25 20:56 UTC | HN request time: 0s | source
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toasterlovin ◴[31 Aug 25 02:18 UTC] No.45079764[source]▶
FWIW, we’ve been affected by the tariffs (10% for now; we import mainly from Vietnam and Thailand at this point). Did our second price increase a few weeks ago. We’ll probably test out how much the market will bear because operating in this market really demands a risk premium. So far it’s not as crazy as the pandemic supply chain crisis, but it’s close. The most insane ending to all of this that I can imagine is that the tariffs get conclusively ruled unconstitutional and all the tariffs payed get returned. Would be a huge wealth transfer from consumers to businesses.
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lm28469 ◴[31 Aug 25 10:22 UTC] No.45082031[source]▶
> The most insane ending to all of this that I can imagine

The most insane ending is that tarrifs are reverted but most of the price hike will stay for good.

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simonh ◴[31 Aug 25 13:21 UTC] No.45082966[source]▶
Why would that happen, if it didn’t happen before the tarrifs?
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tantalor ◴[31 Aug 25 13:39 UTC] No.45083080[source]▶
Because companies make more profits when the prices are higher.

Under normal conditions, if one company increases their price then buyers will find an alternative.

When all the companies increase the price at the same time then there are no alternatives. Customers become acclimated to the new price.

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1. sodality2 ◴[31 Aug 25 15:43 UTC] No.45084059[source]▶
But there then becomes an incentive to lower prices to capture more demand. I don’t think that tariffs will incentivize collusion any more often.
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2. tantalor ◴[31 Aug 25 22:33 UTC] No.45087695[source]▶
That's very risky for companies to do because because you might not capture that demand. If you fail then you just lost money.

One reason is buyers may only consider alternatives when prices increase.

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3. toasterlovin ◴[01 Sep 25 14:08 UTC] No.45092802[source]▶
If you’re lowering prices because your costs went down, then you haven’t lost money.
4. sodality2 ◴[01 Sep 25 20:59 UTC] No.45096554[source]▶
That's how market forces work, it's risky but it pays off until prices hit equilibrium.