The Wall Street Journal has received great coverage of tariffs since the so-called “liberation day” tariffs were unfolding. A recent article (“Retailers have a lid on prices, but we can warn that it won’t last”) shows an important important import pump to tariffs. Sarah Nassauer, Shane Shifflett, and Sebastian Herrera Write (emphasis added):
In the face of rising tariffs, America’s largest retailers are trying to make an event to keep the prices of phone chargers, towels and blenders low.
They are pressured suppliers to absorb free perks from corporate executives. They suspend the submos of goodness from China and are leaning towards stocks already imported to the US
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They warned Trump that higher prices would be harder to avoid, and said certain products could become rare if retailers decide not to sell them to avoid tariff costs.
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Subcutting measures are completely effective. Last week, Walmart told staff at his Hoboken, New Jersey office, that free plates, bowls and cups would no longer be available in the office, according to people familiar with the situation. A note sent to staff found that employees would bring their own. “
There is plenty of insightful information throughout the article that leads to everything in one thing. There is a way for businesses to adapt to tariffs, and not all are raising prices. Walmart is reducing employee benefits. SOM companies are thinking of cutting off their product lines. The company is currently closed. In another WSJ article, Oher companies are reducing employee benefits like travel. All of these are true costs beyond the loss of consumer welfare and loss of deaths due to tariffs.
The economic model is very useful. They explain a lot. Supply and demand models are extremely useful as they explain many human behavior outside of market relations. The model examines the relationship between price and quantity. These are two variables – margins people adjust.
But in reality there are many margins beyond price and quantity. Furthermore, the margins of Thue and their relative value vary from decision maker to decision maker. This means that decision makers will create different decisions even when they face the same constraints. In tariffs, submarines may raise prices. Subs may reduce benefits. Subs can switch between products. It all depends on the cost of opportunity, the realistic alternatives that each individual faces.
The main initiatives from the supply and demand model are not related to price and quantity per se, but the impact costs lie at various margins. When costs rise, people save not only along prices but many margins. To Constent, looking at the costs of customs (or other politics like minimum wage), you can’t just see the changes in prices. Looking at one margin, one may miss all the hidden margins.
