- With companies decreased in the cost of definitions for consumers in the form of high prices, The Federal Reserve in New York found that from last month, many companies raised prices on products that were not affected by fees. Economists said these pricing options benefit from uncertainty in unexpected definitions, but may lead to a poor possibility of inflation.
Not only is the increase in the prices of imported products to compensate for the cost of definitions, but rather it raises the cost of goods that are not affected by these taxes, which is the federal reserve in New York reconnaissance And beige book a report It was released on Wednesday.
The survey was managed for about 110 factories and more than 200 services companies in New York and New Jersey between May 2 and May 9. At that time, Trump has not yet reduced the definitions of China from 145 % to 30 %. and In addition to the fees For steel and aluminum from 25 % to 50 % entered into force on Wednesday.
The Trump administration is also preparing Confronting the Supreme Court The constitutionality of definitions, in the wake of an American court, returned to whether the president has the authority to impose taxes.
A large share of the companies included in the Federal Reserve in early May said it increases the prices of products that are not affected by the overwhelming fees of President Donald Trump, part of a strategy that restores the wider tax impact.
The beige book report said: “One of the heavy suppliers said construction equipment that they raised prices on goods that are not affected by the definitions to enjoy the additional margin before the definitions exceeded their costs.”
Economists significantly expect customs duties to lead to high prices for companies that cannot or unwilling to obtain profit margins, and instead choose the increasing cost of customers, tactics Caution budget office It can be inflation.
The Federal Reserve Survey in New York confirmed the intentions of pricing companies, as “most companies” pass at least some costs of customs tariffs in higher prices, about a third of manufacturers and 45 % of the services companies “completely pass”.
Prices increase under the “uncertainty cover“
Economists warn of the strategy of increasing prices in all fields, even on products that are not affected by definitions, can be an indication that companies that feel pressure on the management of continuous economic uncertainty.
Susan Ariel Aronson, a research professor at the Illiot College for International Affairs at George Washington University, said, said Susan Ariel Aronson, a research professor at Elliott International Affairs at George Washington University, said Susan Ariel Aronson, Professor of Research at Elliott International Affairs at George Washington University, luck. “Nobody knows what Trump will do the customs tariff or other commercial barriers tomorrow. There is no consistency or ability to predict his relatives in trade, and the approach is not transparent, nor does it really do not motivate market conditions.”
Aronson added that companies feel the need to raise the prices of a wide range of products in response to the definitions, “It makes inflation capabilities greater than ever.”
Companies that are considering increasing prices will do this in light of this “uncertainty”, according to Rebecca Hoks, a lecturer at the London College of Business and faculty at Duke Corporate Executive Education.
“We will see some companies trying to do some things that may have been sitting on,” she told F.Ortune. “Maybe you will lay off workers, you may cut a product, and you may raise the price on something you are a little hesitant.”
Humx said that a lot of uncertainty – and companies capable of making many changes in prices annually – may also have the decision to raise prices on a wide range of products by trying to predict the products that can be imposed on future customs duties. In other cases, companies will consider the products that customers demand together. If one of these products is targeted, but not others, this company may still choose to raise the price of both products.
Homicks argue that prices are in prices, although it is a blow to consumers, is the last resort for companies and is only done after a company has exhausted other options such as cost absorption.
“You have to go through these costs,” said Homicks. “If they do not pass these costs, what leads to this?
This story was originally shown on Fortune.com
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