Trump's tariffs lead to a significant increase in costs, companies quietly raise prices without daring to speak out

According to the Zhitong Finance APP, due to President Trump's tariffs on nearly all imported goods, import costs have risen by 10% to 30%, prompting many companies to raise prices in the coming months. However, businesses will not explicitly blame the tariffs to avoid backlash from Trump.

Automaker Subaru recently announced plans to increase the prices of several models by $750 to $2,055. The reason is clear: Trump's tariffs have raised the costs of imported products and components, and companies are passing these costs onto consumers.

However, Subaru did not directly mention the tariffs. The company cited "current market conditions" and stated that "these adjustments are to offset rising costs."

Renowned American financial columnist Rick Newman noted that companies feel the need to use euphemistic language because Trump has threatened to retaliate against those that take reasonable actions to pass on the higher costs imposed by him to consumers. After Walmart (WMT.US) CEO Doug McMillon recently stated that "higher tariffs will lead to higher prices," Trump criticized Walmart.

Trump posted on social media that Walmart should "absorb the tariffs" and not charge customers any fees. He stated, "I will be watching closely, and so will your customers."

Newman remarked that "I will be watching closely" sounds like a threat to use various federal regulatory agencies to harass Walmart and any other companies that publicly criticize Trump's tariffs. Trump is likely to do this, or at least attempt to. After toy manufacturer Mattel (MAT.US) announced price increases due to tariffs, Trump stated, "We will impose a 100% tariff on its toys; it won't sell a single toy in the U.S."

Newman believes that no company wants to be publicly criticized by Trump, but American businesses have far more experience in passing on costs than Trump does in imposing tariffs, and they will not "absorb the tariffs."

Trump's impulsive defense of his tariff policy indicates that he understands the nature of tariffs: they are taxes on American businesses and consumers. For years, Trump has mistakenly claimed that foreign companies should pay the tariffs. In reality, it is American importers who receive the tax bill and remit the taxes to the U.S. government. If foreign companies were to pay the tariffs, then American companies like Walmart and Mattel would not need to "absorb" the tariffs.

Companies do not always have unlimited pricing power. At some point in the supply chain, buyers may be unwilling to pay the higher costs. This means that some companies will be forced to "absorb" the higher costs or earn lower profits.

Most companies will not and cannot meet Trump's demands to indefinitely tolerate declining profits. Publicly traded companies are obligated to enhance profitability. If they fail to do so, shareholders have the right to fire the CEO and seek better candidates. Private companies face different rules, and few will sacrifice profits for a politician.

The only way out for all these companies is to raise prices without fully explaining the reasons. Almost everyone paying attention to the market knows that Trump's tariffs are reigniting inflation and distorting the economy. Consumers are well aware of this too. Surveys like the University of Michigan's monthly consumer confidence index show that respondents place a high value on Trump's tariffs and are prepared to deal with punitive inflation in the coming months Newman concluded that Trump does not particularly care about American spending. If he really cared, he wouldn't have imposed tariffs in the first place. What Trump truly cares about is how to deflect blame when his policies backfire. CEOs will soon realize this. They do not want consumers to think they are price gouging, but more importantly, they need to assure shareholders that profit margins are secure