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- cross-posted to:
- [email protected]
Summary
German engine maker Deutz said it will fully pass Trump’s new 20% tariffs on EU imports to American customers through price hikes.
The move underscores warnings that tariffs act as consumer taxes and could raise inflation.
Trump claimed the tariffs as necessary to combat trade imbalances and protect U.S. manufacturing. However, EU officials, including Ursula von der Leyen, pushed for zero-for-zero tariff deals, but Trump rejected them.
The EU plans retaliatory tariffs by mid-April. Economists and officials warn of recession risks and disrupted supply chains.
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I don’t understand. If Deutz sells something for $100, and the Americans pay an extra $20 in tariffs to their government for a total of $120, how will Deutz pass this back? Are they going to calculate how much their losses are and add a percentage to the price themselves? Or are they just going to be selling it for $120 themselves instead? (Which would make it cost $144 with tariffs)
Landed price to suppliers will be 20% higher and they will charge accordingly at the end user level.
So it’s just a punishment?
Always was.
Surprise, surprise. If only somebody had predicted this…
That’s exactly how tariffs work. It’s always been how tariffs work. No company is going to lower profits if they don’t have to.
Some of them will end up with increased profits because Trump supporters are prepared to pay more. As we saw in the last inflation cycle, the incentive to exploit a crisis to increase margins is hard to ignore.
Yes and sometimes worse. When a market cannot bear a price increase, the product simply ceases to exist. E.g. a low end $800 bike would never sell at $1,600.
I think you need a more extreme number if you say the words “would never sell” because that is only double the price.
With the other inflation we’ve seen, especially for the price of eggs, and upcoming tariffs those kinds of changes are not unheard of.
Supply and demand would still say that there would be less products demanded and produced, but unless we are talking about specific branding, I would be surprised if supply or demand for any kind of product drops to zero.
