(C) Daily Kos This story was originally published by Daily Kos and is unaltered. . . . . . . . . . . Economists, trade groups & IKEA’s CEO warn tariffs will raise prices - it’s “an inevitable fact” [1] ['This Content Is Not Subject To Review Daily Kos Staff Prior To Publication.'] Date: 2024-11-27 In 1980, Reagan said his ‘ voodoo ’ economics plan would balance the federal budget by slashing taxes while also increasing defense spending. Mainstream economists said he was nuts. Business leaders loved it. In 2024, Trump crowed that China, Mexico, and China would absorb the cost of his tariffs while he would use the revenue raised by the trade penalties to balance the budget, fund more tax cuts, and increase defense spending. Mainstream economists say he is nuts. And this time around, business leaders agree he’s insane. Not that most of them will risk their place at the trough by saying it plainly. There are exceptions. On Wednesday, when asked about Trump’s tariffs, Jesper Brodin, CEO of the Ingka Group (which runs most IKEA stores) told CNN . “In general, we don’t believe tariffs will support international companies and international trade. At the end of the day, that risks ending up on the bills of customers. Tariffs make it more difficult for us to maintain the low prices and be affordable for many people, which in the end is our goal. We have never experienced a period of benefit when we had high tariffs [referring both to Ikea and the global economy]. But it’s beyond our control. We will need to understand and adapt.” By ‘adapt’ he meant IKEA would have to increase prices for its customers. He hedged on whether he would source from non-tariff countries. However, he did emphasize that IKEA has longstanding relationships with suppliers of more than 10 years on average. And that it would “stick to long-term relationships, for better or worse.” Translation: “We think Trump’s tariffs are going to kick consumers in the ass. But we anticipate the pain of his stupidity will be temporary as people begin to realize the full scope of his lies. So we’ll ride it out.” Trump apologists might dismiss Brodin’s warning as the ravings of a Scandinavian socialist ( Brodin is Swedish). But considering IKEA’s domination of the assemble-it-yourself furniture segment, its management knows what it’s doing. Besides, there is a chorus of American business types who agree. Tom Madrecki, vice president of campaigns and special projects at the Consumer Brands Association, said tariffs were a “clear and present danger” to its members. The group represents huge consumer goods concerns such as Coca-Cola, General Mills, Molson Coors, and dozens of other packaged goods companies. Matt Priest, CEO of Footwear Distributors and Retailers of America — a group representing dozens of companies, including Nike, DSW, Crocs, Under Armor, and more — appeared on CNN on Wednesday to discuss Trump's plan to install high tariffs on foreign goods. He pointed out that customers will ultimately bear the cost of Trump’s economic folly. "We've seen this movie before. We've been paying duties since 1930, almost 100 years... I will tell you that we know how these impact consumers. As costs go up at the border, we pass those costs on to our consumers; that's just how it works in our society." He added for those who missed the point the first time: “I can tell you that any additional tariffs from the president-elect will mean higher prices and inflation." And for the particularly slow learners, he piled on: "So if you think about a kid's shoe making its way across the border, any time costs go up, whether it's for energy or labor or the tariffs that the U.S. government charges at the border, those costs go up for the consumers. It's an inevitable fact." At this point, anyone who still doesn’t get it must be a MAGA. It isn’t just business people. Money mavens also think Trump is a bull in the economic china store. Jesus Cañas, senior business economist for the Federal Reserve Bank of Dallas explained Macroeconomics 101. “When we mess with trade relationships, we kind of shoot ourselves in our own foot. If firms have to pay 25% more, they won’t take that out of their profits, they’ll just pass that on to us.” Most people think of trade as goods made in one country being exported to another. But as Tom Fullerton, an economics professor at the University of Texas at El Paso, explains, a majority of products traded across the U.S., Mexico, and Canada borders are ‘intermediary goods’. An American car company may import Chinese parts for a car. Then send the semi-assembled vehicle to Mexico for a circuit board. Then reimport that car back to the US to be stored in a warehouse in El Paso, before the car is finished on an assembly line in Dallas. By the time you add up all the tariffs, God alone knows what the price of the damn thing will be. Meanwhile, Trump has promised to slash the federal workforce, which raises the question, Who’s going to check all the extra paperwork? It feels like a lot of new hires to me. Bitter irony is the American taxpayer paying for more federal agents whose job is to ensure that citizen pays more for the stuff they buy. It’s the same with the universal undocumented worker deportation plan. The taxpayer will pay 1,000s more ICE agents whose job will make their groceries cost more. Where’s DOGE when you need it? Some people speculate that Trump is not serious about tariffs. They say he is threatening tariffs to convince Mexico to stop illegal immigration and drugs, and China to cut off the supply of fentanyl. Which raises the question, What did Canada do? Here’s my two cents. If you want to expel all undocumented aliens, throw the CEOs and HR managers of businesses that hire them in jail. Minimum sentence 10 years. Add the farmers and homeowners who employ them to the prison population. Problem solved. However, Trump will have to explain why food is expensive and in short supply. As for drugs, to hell with the billion-dollar border/tariff boondoggle that gouges the American consumer. Invest the money in rehab and treatment centers. The law of the economic jungle is simple. If an American demands drugs someone foreign or domestic will supply them. The War on Drugs is 54 years old. Is it working? [END] --- [1] Url: https://dailykos.com/stories/2024/11/27/2289066/-Economists-trade-groups-IKEA-s-CEO-warn-tariffs-will-raise-prices-it-s-an-inevitable-fact?pm_campaign=front_page&pm_source=latest_community&pm_medium=web Published and (C) by Daily Kos Content appears here under this condition or license: Site content may be used for any purpose without permission unless otherwise specified. via Magical.Fish Gopher News Feeds: gopher://magical.fish/1/feeds/news/dailykos/