It’s the tariffs. You’re assuming that everyone will raise the price and have the same goals. Some businesses will see it as an opportunity to undercut and gain market share.

After all, total profit = sales margin * sales volume. You can increase your profit by increasing your volume because you kept your prices unchanged while your competitors decided to increase prices.

▲ marknutter 6 days ago | parent [-]

Tariffs don't affect products that are produced locally.

▲ myrmidon 6 days ago | parent | next [-]

Tariffs affect local product prices in a lot of ways.

1) They reduce competitive pressure so local producers can raise prices without losing market share (that is the actual point)

2) They increase local demand for production capacity and labor in general, driving up costs even in sectors that are completely unaffected by the tariffs themselves

▲ marknutter 6 days ago | parent [-]

McDonald's was never sourcing chicken for their chicken nuggets from outside the country.

▲ deeg 6 days ago | parent | next [-]

Tariffs raise the price in tangential ways. Tariffs on Chinese steel means US chicken wire producers switch to more expensive US sources. Increased demand for US sources make it even more expensive. Farmers buy the more expensive chicken wire, passing the added expense to McDonalds, which passes it on to you.

▲ ivape 6 days ago | parent [-]

The chicken nuggets were edging past $5 dollars before the tariffs, during the Biden era. Mcdonalds owns Chipotle so they are well aware of premium pricing for regular food. They applied the same pattern to Mcdonalds, the same way Starbucks once convinced everyone coffee can be as much as $8. This is all before tariffs.

No one's giving tariffs a pass, but we are giving regular people a pass for some reason. It takes people to do all of this.

To further my point, the Gap owns Old Navy and Banana Republic. It's all the same material mostly, but it's tiered pricing (Old Navy cheapest, Gap, to Banana Republic most expensive). Over time, they raised the floor of pricing at Old Navy. Financial engineering is not just happening in the stock market.

The floor for prices on certain things have just gone up with no real reason other than "its about time we raised these prices", and it's happening in a collective way.

▲ aurareturn 5 days ago | parent [-]

  The floor for prices on certain things have just gone up with no real reason other than "its about time we raised these prices", and it's happening in a collective way.

This invalidates every supply and demand theories. I'm unconvinced that you are right.

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disgruntledphd2 5 days ago | parent [-]

In consumer markets, the notion of a rational consumer is a myth.

If we had rational consumers then the world would be very, very different.

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aurareturn 4 days ago | parent [-]

I'm unconvinced that you can get every competitor to agree on a price increase.

All it takes is for one business to see it as an opportunity to lower prices to gain more marketshare for everyone else to also have to lower prices.

	▲	disgruntledphd2 2 days ago \| parent [-]
		> All it takes is for one business to see it as an opportunity to lower prices to gain more marketshare for everyone else to also have to lower prices. This would again, be true in a very simplified world. A lot of the time your suppliers have committed to provide X widgets by Y date at Z place, and it's not trivial to swap out A widget provider for B widget provider. And this is the easy case, how much would it cost to rebuild all your LLM based tools with Anthropic after building on OpenAI. So, yeah in theory it requires perfect co-ordination but really if there are 4 big suppliers and 3 increase price, their profits will increase and the CEO of the other will probably be fired by the board.

▲ myrmidon 6 days ago | parent | prev [-]

Yeah, but that does not really matter; everyone else that imported meat (or feed ) now competes for McDonalds suppliers, which means higher prices.

You can also expect to pay more for labor itself, because every bit of industry that you bring back (or scale up, at least) with tariffs competes with the essentially fixed labor pool, and there was not a lot of slack (unemployment) to start with.

	▲	skirmish 5 days ago \| parent [-]
		Fast food prices jump a lot whenever minimum wages increase. I am convinced this is a major contributor to McDonald's price rise.

▲ rsynnott 6 days ago | parent | prev | next [-]

This is true if and only if those products have no imported inputs, and if tariffs aren't causing general inflation which is forcing up wages of the people making them via cost-of-living increases.

Ultimately, unless you're an autarky (in which case tariffs are in any case irrelevant), high tariffs should be expected to lead to broad price increases, even for goods which are not directly imported.

▲ wtfwhateven 6 days ago | parent | prev | next [-]

Not even remotely true.

▲ avgDev 6 days ago | parent | prev [-]

Wrong.