{"id":134263,"date":"2025-04-19T07:55:06","date_gmt":"2025-04-19T07:55:06","guid":{"rendered":"https:\/\/quixnet.net\/wpinstance\/could-trumps-tariffs-give-a-green-light-for-corporate-profiteering-the-guardian\/"},"modified":"2025-04-19T07:55:06","modified_gmt":"2025-04-19T07:55:06","slug":"could-trumps-tariffs-give-a-green-light-for-corporate-profiteering-the-guardian","status":"publish","type":"post","link":"https:\/\/quixnet.net\/wpinstance\/could-trumps-tariffs-give-a-green-light-for-corporate-profiteering-the-guardian\/","title":{"rendered":"Could Trump\u2019s tariffs give a green light for corporate profiteering? – The Guardian"},"content":{"rendered":"

Expectations of inflation, and recent waves of price rises, could be self-fulfilling and fuel \u2018greedflation\u2019 \u2013 and it may not only apply to US consumers
Over the past few years consumers have grown used to seeing prices rise at an exorbitant rate. The cost of everything \u2013 from used cars to utility bills and the humble loaf of bread \u2013 has rocketed in the worst inflation shock across advanced economies since the 1980s.
While inflation has cooled in the past year, talk of fast-rising prices is back on the agenda from Donald Trump\u2019s escalating trade war.
Most economists agree the US imposing tariffs on imports from its largest trading partners will lead to higher prices for American consumers<\/a>. The picture is not as clear for other countries. Trump\u2019s trade policy could also change in an instant. However, experts say the very idea that consumers are expecting a fresh inflation burst could become self-fulfilling by giving companies cover to put up their prices.
\u201cA narrative [is needed] to tell consumers why prices are going up. Tariffs provide exactly that story,\u201d says Paul Donovan, the global chief economist at UBS Wealth Management.
\u201cThe fact we had the post-pandemic inflation waves has also changed things. Because we have had inflation in the past few years, for consumers \u2013 nobody likes it \u2013 but they are more accepting that this is what happens.\u201d
In the US, the Democrat senator Elizabeth Warren has warned<\/a> Trump\u2019s tariffs could lead to profiteering, giving corporations a \u201cnew set of excuses to price-gouge American consumers\u201d and arguing that companies will probably put up prices even for goods that do not face additional border taxes. Elsewhere, the phenomenon has been labelled as \u201cgreedflation\u201d<\/a>, where businesses inflate their prices to increase profits rather than pass on legitimate cost increases to consumers.
This week Sony announced it was putting up the price of its PlayStation 5 by as much as 25% in some markets<\/a>. While the Japanese company did not explicitly blame the US president\u2019s policies, instead citing a \u201cchallenging economic environment<\/a>\u201d, analysts said the decision was more than likely an attempt to get ahead of Trump\u2019s tariffs.
However, its decision included raising prices in the UK, Europe, Australia and New Zealand \u2013 highlighting how multinational companies could raise prices even in non-tariffed markets amid the escalating cost of using complex international supply chains during a global trade war.
\u201cSony\u2019s decision to raise PlayStation prices outside the US offers a glimpse of how Trump\u2019s tariffs could prove inflationary abroad in certain categories,\u201d says Claus Vistesen, the chief eurozone economist at Pantheon Macroeconomics. Sony declined to comment.
Experts say the inflationary risks are most extreme for US consumers \u2013 where headline inflation dipped to 2.4% in March<\/a>, according to figures published earlier this month. Some economists warn inflation could hit 4%<\/a> this year. On Wednesday Jerome Powell, the chair of the US Federal Reserve, warned tariffs were \u201chighly likely to at least generate a temporary rise in inflation,\u201d in a challenge for the central bank.
Even after Trump\u2019s partial retreat on his toughest \u201cliberation day\u201d tariff threats \u2013 including rolling back to a 10% baseline charge on all trading partners, and a focused 145% rate on Chinese imports, barring some exemptions for electronics \u2013 US consumers are still facing a sharp rise in living costs.
According to analysis by the Yale Budget Lab<\/a> published this week, taking account of Washington\u2019s latest position, US consumers face an overall average effective tariff rate of 28%, the highest since 1901.
It warns consumer prices could rise by 3% in the short-run as a consequence \u2013 the equivalent of an average per household loss of about $4,900 (\u00a33,700) \u2013 with stark rises for clothing, shoes and electrical goods in particular.
\u201cPart of the cost here is no one can figure out what the final policy will be,\u201d says Martha Gimbel, the co-founder of the Budget Lab, who was previously on Joe Biden\u2019s White House council of economic advisers. \u201cThe fact that consumer expectations of inflation are starting to go up suggest this is going to spill over and take off from an inflation standpoint.
\u201cOne of the tragedies of the tariffs is they\u2019re coming at a time when this inflationary period seemed to be moving behind us, and American households were starting to feel better. And now it seems like we\u2019re going to get the show on the road again for no reason whatsoever.\u201d
One piece of research that has gained near mythical status among economists in recent months is a 2020 study of tariffs Trump applied on washing machines<\/a> during his first term. It found domestic machines and clothes dryers, which were not subjected to tariffs, also rose in price.
Calling it a \u201cgreat example\u201d, Jerome Powell told a Fed press conference last month that it showed how tariffs can raise prices across the board. \u201cManufacturers just, you know, they just followed the crowd and raised it.\u201d
Trump applied the tariffs, ranging from 10-50%, in 2018 after a complaint by the US manufacturer Whirlpool<\/a> that foreign rivals were flooding the market with cheap machines, threatening American jobs. While the policy helped create about 1,800 new jobs, it came at an astronomical cost: consumer prices rose by almost $1.5bn, or about $817,000 per role.
Felix Tintelnot, one of the report\u2019s authors and who is now an economics professor at Duke University, says there are several lessons that are relevant today. \u201cI\u2019m not a fan of the term \u2018price gouging\u2019. I think one needs to consider price changes on goods beyond those directly affected by tariffs \u2013 but one might also label this as smoothing out price changes.
\u201cIf there hadn\u2019t been the opportunity to raise dryer prices, washer prices might have risen more. Furthermore, facing less competition from foreign firms, domestic producers might raise their prices as well.\u201d
The danger of firms using the cover of tariffs is acknowledged among Trump\u2019s inner circle \u2013 to the point that, should inflation rise, it is clear the president will begin bashing corporates for price gouging.
Andrew Ferguson, the US Federal Trade Commission chair, warned this month<\/a> that the competition watchdog was watching to see that American companies compete vigorously on price.
\u201cThese necessary tariffs should not be interpreted as a green light for price fixing or any other unlawful behaviour,\u201d he said.
However, Paul Donovan says US companies have an opportunity. \u201cWith imports of foreign goods being taxed, a US manufacturer can choose either to increase profit margin or increase market share.
\u201cIf, for example, your competitors are being charged [a tariff of] 20%, let\u2019s raise our prices 15%. Then you increase margin, and you also increase market share a bit.\u201d
Such a tactic could be tough after the multiple rounds of price increases since 2021, limiting company pricing power amid the risk that further price hikes could damage sales. However, Donovan says consumers expect more pain to come.
\u201cMy suspicion is, in an environment where there is a broad expectation of higher inflation in the US, where consumers are generally expecting it, companies will feel more able to go for the price increase option.\u201d
Despite this, expectations are deeply split along political lines. In the increasingly shattered US political landscape, Trump supporters bet tariffs are the magic bullet the economy needs, even as Democrats and mainstream economists decry them as madness.
In the latest authoritative consumer sentiment survey from the University of Michigan, which is closely monitored by the Fed, Democrat voters reckoned inflation was on track to hit 7.9% within a year, while Republicans think it will collapse to 0.9%.
\u201cIt\u2019s all about the cable news channel you are watching. Some are saying this is the end of days, the others say: \u2018Tariffs are fine; they don\u2019t affect Americans, the foreigners pay them\u2019,\u201d says Donovan.
However, independent voters also think inflation will rise sharply, to 6.2%. The median expectation across all political persuasions was for a rise to 6.7%<\/a>, the highest level since 1981.
\u201cI am trying to answer this politely,\u201d says Gimbel, when asked about the split. \u201cPeople are not necessarily paying attention to facts on the ground.
\u201cI personally don\u2019t think inflation will skyrocket as high as the Democrats expect, and I don\u2019t think it\u2019s going to fall. But you are seeing inflation expectations spike among independents, and that speaks to the way this is starting to take off.\u201d<\/p>\n

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Expectations of inflation, and recent waves of price rises, could be self-fulfilling and fuel \u2018greedflation\u2019 \u2013 and it may not only apply to US consumersOver the past few years consumers have grown used to seeing prices rise at an exorbitant rate. The cost of everything \u2013 from used cars to utility bills and the humble […]<\/p>\n","protected":false},"author":1,"featured_media":134264,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-134263","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","entry"],"_links":{"self":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/posts\/134263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/comments?post=134263"}],"version-history":[{"count":0,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/posts\/134263\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/media\/134264"}],"wp:attachment":[{"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/media?parent=134263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/categories?post=134263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quixnet.net\/wpinstance\/wp-json\/wp\/v2\/tags?post=134263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}