Let’s say that you owned a fast-food franchise that sold burgers and fries. Let’s say you owned a stable of those franchises, hundreds or thousands. T
The President posts a note saying “The fast-food industry has been ripping off the American consumer for years. They charge too much for their cheeseburgers and pocket the cash. Then they turn around and use that money to buy goods from foreign countries: cars from Germany, wine from France, Yachts from Italy and Turkey, and diamonds from Belgium. It is time for this to STOP. Therefore, today I am placing a 100% tariff on all burgers sold from fast-food restaurants. This tariff must be paid to the US Treasury before the burger is delivered to the consumer.”
What do you do as the restaurant? Do you “eat” the new tariff and for each $3.00 burger, you pay the US Treasury $3.00 electronically before you deliver the burger to the consumer?
Maybe you add all, or most of the $3.00 to the bill, maybe even listing it separately so that it appears under the sale price, as an additional fee that has already been paid to the US Treasury and is to be collected before you get you burger.
Now, many people believe that the President is just posturing in order to “make a deal” with the restaurants. He really doesn’t want a 100% tariff; he wants to negotiate down to agree on a tariff of 20%. Do you then agree to this negotiation? Do you then raise your prices by 20%, or less?
After you make that “deal”, are you satisfied that the President is now satisfied?
What happens when next week he tells you that he has learned that your corporate parent purchases beef from foreign countries and that is hurting American beef farmers. Even though you may purchase beef only from local suppliers, the President places a 50% tariff on all franchisees in the chain until the corporate partner stops purchasing beef from foreign sources. What do you do? Do you raise your prices after paying the tariff to the US Treasury?
When does any “deal” last longer than the next pressure point?