That is not true, though it is not as bad as some pundits have said.
President Trump Announces Successful U.S-China Trade Proposal, 55% Tariffs on Chinese Imports – There Will Be No Inflation from This Agreement
June 11, 2025 Using the article's $10 jeans manufacturing cost for $100 designer jeans, the inflation is 5% if the 50% tariff is passed on. If the manufacturer eats the margin, then their profits go down $5 a pair sold and that slows the economy just as ANY tax slows growth. So, no inflation but increased risk of recession with less growth drivers.
In San Francisco's Union Square, two major department stores have closed up because the theft reduced their margins sufficiently that it was not worth keeping those flagship locations open. My guess the many "black owned businesses" struggling already to stay open in Oakland with theft and peaceful protest looting will find that extra $5 cost for their clothing a last straw. I believe Steph Curry's wife ALREADY closed her Oakland clothing store.
Now if those $10 jeans are sold to Walmart or Costco to sell for $30, there isn't room to eat the $5 margin, especially at Costco where they generally just charge enough to break even and make profits on the annual membership. I suspect the athletic clothing I buy dirt cheap at Costco compared with the buying similar items at LuLu, REI, Northface, etc. will see price increases, and some has started already.
Fortunately, a lot of those companies have moved production out of China and to other countries where the tax (called a tariff) will probably be lower. |
