Tariffs are a tax…the biggest tax increase in history since World War II. In the next post “TARIFFS: WHY?’ we examine the real cause of all this tariff nonsense. But the purpose of this post is to provide simple math. First, it must be said that Trump has no understanding of how tariffs work, what they are designed to achieve or how they might impact in our economy. That said–all he knows is that he gets access to all the tariff money and that’s all he really focuses on because that’s his goal. Second, Trump changes his mind every day/week on who to tariff, what to tariff or how much to tariff. Just today he suggested bringing the European Union “into line” (whatever that means) with a 50% tariff. Third, in response to retailer blowback on the impact Tariffs will have on prices to consumers, Trump recommends that the retailers just “eat” those costs and not pass them on to their customers. Now, let’s explore the lunacy of that thought. Major successful retailers who see the average American as their customer base MUST control their prices and their price changes. Example: Target has a less than 2% profit margin; Kroger has existed over a hundred years on less than 2% margin; Walmart has a current margin of less than 3%. And so it goes with major national chains. Now add a 10% tariff to their cost of goods sold and ask yourself how those major stores can “eat” that cost hike without passing it onto their customers. ANSWER: THEY CAN’T. If they tried, the simple math will condemn them to extinction in a very short time. But, how many of these retailers–do you think–are the stores frequented by billionaires? Do you think Elon Musk shops at Target or Walmart? Are you having a problem seeing them in line at one of those stores? But the Nordstrom’s, Macey’s, Bloomingdales, Harrod’s and other high end retailers who cater to the super wealthy may pass along their tariff costs–unless, of course–Trump grants a specific exemption. The point is: Trump doesn’t like the negative publicity that tariff-inspired inflation causes but it won’t affect his mega donors so why worry? Just tell the Target’s and Walmart’s of the world–just eat it or not. Trump could not care less as long as he gets his pound of flesh from the average American. This is just another way for the rich to get richer and the poor to suffer a major loss in buying power and severe household budget stress. In this country, TODAY, less than 1% of the citizens own nearly 50% of all the wealth. It’s not what the Founding Fathers had in mind when they talked about equality.
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