President Trump has taken aim at at least four retailers over possible tariff price hikes with an effort that, for now at least, is largely about applying public pressure to CEOs.
"I'll be watching," he told Walmart (WMT), with harsh words also directed toward Amazon (AMZN), Ford (F), and Mattel (MAT).
It's just one front in a largely one-way war of words between the president and corporate America in recent weeks over tariffs, with Trump also threatening new tariffs for both Apple (AAPL) and Samsung (005930.KS) Friday over overseas phone production.
But it's the tariff-fueled price hikes already being felt by his base of voters that hit the closest to home for Trump politically as he drops hints that he could do more than just watch prices rises for consumers in the months ahead.
Threats of additional tariffs in response to price increases have already been offered with an array of additional tools at the president's disposal if he decided to escalate further.
Options range from things like industry-wide investigations by the Federal Trade Commission (FTC), other government investigations into specific products and company profits, pushing for new Capitol Hill legislation on the issue, or even price controls via executive order.
If some of those options sound familiar, that's because many of these tools were considered and even employed during Joe Biden's presidency as part of the then-Democratic charges of "price gouging" amid inflation. Formal inquiries were even launched in certain areas like meatpacking.
Other options for Trump stretch back much further, notably a Richard Nixon-issued executive order in 1971 that imposed a 90-day freeze on wages and prices during that inflation crisis.
Increasing presidential openness to action on prices
Ryan Bourne, an economist at the Cato Institute, has studied the issue and says the US remains a long ways politically from something like those draconian Nixon-era policies.
But he nevertheless sees a sort of bipartisan elevation in recent years in government willingness to interfere in business pricing decisions.
"I do worry that we're on the conveyor belt towards that type of policy," he said of price controls in a recent interview.
For now, he added, businesses are in an environment where CEOs "increasingly have to second-guess how the president or the administration will react to them."
Trump has not suggested that price controls are in the offing. He also spent much of the last campaign attacking a Kamala Harris plan for a ban on food price gouging with his allies saying it amounted to "Soviet-style" controls.
Yet Trump has made clear he is keeping his options open, posting on May 17 that Walmart, along with China, should "'EAT THE TARIFFS,' and not charge valued customers ANYTHING."
Likewise, a plan by Amazon to label tariff costs was labeled by the White House a "hostile and political act."
Trump also responded to a suggestion that Ford could raise prices by saying "they wouldn't sell any cars" if they did and that if Mattel acted, "we'll put a hundred percent tariff on his toys."
A 'signaling' question for companies
Trump has also seen some results from his public-pressure campaign, which included multiple calls to CEOs from both the president and Treasury Secretary Scott Bessent.
One recent success for the White House came when Home Depot (HD) publicly pledged in multiple interviews not to raise prices.
It's a stance that Trump's aides celebrated, but D.A. Davidson Managing Director Michael Baker argued in a recent Yahoo Finance video interview that it wasn't that different from Walmart's approach.
"It's much more about signaling," he said. "I don't really think those two companies, Home Depot and Walmart, are doing things that much differently. It's just how it's articulated."
And Ed Yardeni of Yardeni Research noted that other companies may have little choice but to risk Trump's ire given thin profit margins in retail, writing, "if they don't raise their prices ... that's not a sustainable business model."
The situation has been further confused by the White House often taking the position that it's foreign companies that absorb the tariffs, even as multiple retailers have offered warnings about the pressure they are under.
"The president is committed to ensuring that prices remain low for American consumers, and he maintains the position that foreign countries will absorb these tariffs," White House press secretary Karoline Leavitt said recently.
Yet it's a position that few economists agree with. The Cato Institute's Bourne said that increasing pressure on prices could fuel the developing bipartisan narrative that "greedflation" — the charge of companies taking excessive profits during a crisis — is a problem that needs addressing.
During Biden's presidency, "you saw a lot of browbeating of companies over shrinkflation and junk fees," he said, adding that something similar could take further root under Trump, especially if tariff-fueled price volatility leads to unrest for consumers.
For now, though, Bourne added, "I fundamentally think this is just about trying to jawbone companies."
https://finance.yahoo.com/news/what-trump-could-do-if-hes-serious-about-trying-to-make-companies-eat-tariff-price-hikes-080006662.html
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