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How is it people don't understand basic principles of profit?

I had a coworker today come over with an invoice, asking if we had been billed for tarrifs on our parts yet.

I told her I didn't know because I don't deal with purchase orders.

She said, "I got one on this invoice, and I don't think that is how tarrifs work. Why do they have a tarrif on something made in the US?"

I said, "More than likely, they use materials they have to get from overseas distributors."

She seemed shocked. "Well that isn't right then! They need to deal with the tarrifs! They are the ones who decided to use materials from overseas!"

I looked at her and said, "That's not how tarrifs work. That is what our government has tried to tell us, that businesses will absorb the tarrifs, but that isn't how the reality works. Every business will always pass the tarrif costs onto the end consumer. This is why everything is costing so much more now. We are paying the tarrifs."

"That's not right! We shouldn't have to pay that!"

"That is how businesses have always operated and always will."

I wish people understood the basics of economics. They are too easily fooled.
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Northwest · M
General Motors may absorb tariffs for a while, but at some point, they will need to start firing people. But not every company is a general motors.

However, not all businesses are General Motors. Small businesses, accounting for nearly 45% of the US GDP will get hard, because they operate on thin profit margins.

I wish people understood the basics of economics. They are too easily fooled.

We have a President who convinced them this is the way it is. A President who the Wall Journal Journal thinks is illiterate when it comes to economics, and a secretary of commerce who does not understand the first thing about commerce.
texasgamblerguy · 46-50, MNew
@Northwest I think it’s a myth that smaller companies necessarily have smaller profit margins!? It is more industry by industry or even product by product
Northwest · M
@texasgamblerguy

I think it’s a myth that smaller companies necessarily have smaller profit margins!? It is more industry by industry or even product by product


Small businesses, especially early-stage ones, often have lower profit margins compared to larger, more established businesses.

This may vary by industry and business model.

However, higher operating costs, and focus on growth, will generally result in lower margins. Even the unicorns, can only sustain margins for so long, before the copy cats figure it out.

Most importantly though, any business model based on lowering margin, is not sustainable. And that's elementary.
texasgamblerguy · 46-50, MNew
@Northwest So what was your point?
Northwest · M
@texasgamblerguy
So what was your point?

That your claims have no basis in fact.
texasgamblerguy · 46-50, MNew
@Northwest Grocery stores sustain on low margins, gas stations substain on low margins. Your make generalizations without facts.
Northwest · M
@texasgamblerguy
Grocery stores sustain on low margins, gas stations substain on low margins. Your make generalizations without facts.

Every single thing you say is fact free.

Grocery store, are generally not small businesses. Not to mention that they do not generally absorb price hikes from suppliers. That is with the exception of those that choose to absorb some costs to remain competitive or for promotional purposes, and it's only for short durations.

But feel free to provide "facts" proving differently.
@texasgamblerguy you just keep digging your hole deeper, on all fronts, confirming you are talking out of your MAGA @$$
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