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Jose Garcia

(2,605 posts)
Fri May 31, 2019, 09:31 PM May 2019

Costco warns 'prices will go up' due to new tariffs

Source: The Hill

Retail giant Costco says it will likely have to raise prices due to the ongoing trade war between the U.S. and China.

USA Today reports that Costco's chief financial officer, Richard Galanti, said during an earnings call with investors that the company is hoping it does not need to raise prices, but is preparing to do so after new tariffs were announced this month between the two nations.

“At the end of the day, prices will go up on things,’’ Galanti said. “We’re hopeful the ebbs and flows of the relations between our countries improves in that regard.’’

Read more: https://thehill.com/policy/finance/international-taxes/446444-costco-warns-prices-will-go-up-due-to-new-tariffs

37 replies = new reply since forum marked as read
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Costco warns 'prices will go up' due to new tariffs (Original Post) Jose Garcia May 2019 OP
No sweat! Dotard says China is paying for it. keithbvadu2 May 2019 #1
And Sam's Club and Walmart dalton99a May 2019 #2
"at the end of the day"... mahannah May 2019 #3
No shit, Costco.... KY_EnviroGuy May 2019 #4
WHat do you expect them to do? Sell things at a loss? PSPS Jun 2019 #6
Sharing the burden of tariffs does not mean they sell at a loss. KY_EnviroGuy Jun 2019 #9
I don't believe that Costco can afford to "share the burden" of tariffs based on their business truthisfreedom Jun 2019 #10
+ agree. iluvtennis Jun 2019 #11
Probably not and still keep the market analysts and shareholders happy. KY_EnviroGuy Jun 2019 #15
In agreement with you pandr32 Jun 2019 #26
Would you like them to quit giving their employees health insurance and paid time off? obamanut2012 Jun 2019 #22
I invite you to re-read my original post and contemplate. n/t KY_EnviroGuy Jun 2019 #24
COSTCO rocks. truthisfreedom Jun 2019 #8
It's illegal for publicly traded companies to reduce profits to shareholders. yardwork Jun 2019 #20
Their primary legal obligation is to their shareholders. marybourg Jun 2019 #36
At least Costco pays their employees Cha Jun 2019 #5
Not their American Vodka, the #1 selling product at COSTCO. truthisfreedom Jun 2019 #7
Just glad Costco is putting the truth out in plain site to counter trump's lies about China paying. iluvtennis Jun 2019 #12
That should be displayed on the door of every store Meadowoak Jun 2019 #29
Even Dollar Tree MurrayDelph Jun 2019 #13
I think they said their new motto will be ---EVERYTHING UP TO $5 riversedge Jun 2019 #27
Prices are bound to go up. Aussie105 Jun 2019 #14
I only go there for the food court mostly dustyscamp Jun 2019 #16
The gas, with using the Costco Visa, is .25 cheaper than any other gas station around me. 3Hotdogs Jun 2019 #17
Thank God for all this winning. 3Hotdogs Jun 2019 #18
Tariff tax question... Talitha Jun 2019 #19
What tax money? yardwork Jun 2019 #21
Sounds like I misunderstood things... Talitha Jun 2019 #25
Correct. The purpose of tariffs is to drive up prices. yardwork Jun 2019 #28
Thanks for the info!! Talitha Jun 2019 #30
It's way oversimplified, of course! yardwork Jun 2019 #31
There is no "new windfall of tax money" obamanut2012 Jun 2019 #23
A tariff is similar to a VAT. roamer65 Jun 2019 #33
The higher the better. roamer65 Jun 2019 #32
I must have missed Walmart's announcement. SergeStorms Jun 2019 #34
You indeed did miss that news from two weeks ago: Jose Garcia Jun 2019 #35
Nice work, President Dipshit. smirkymonkey Jun 2019 #37

KY_EnviroGuy

(14,494 posts)
4. No shit, Costco....
Fri May 31, 2019, 11:43 PM
May 2019

following free-market laissez-faire traditions, we never expected you to reduce profits to shareholders.....

KY_EnviroGuy

(14,494 posts)
9. Sharing the burden of tariffs does not mean they sell at a loss.
Sat Jun 1, 2019, 01:10 AM
Jun 2019

I personally despise big box stores due to what they've done to our small communities, but I will give this guy credit for being straightforward that consumers will eat the tariffs. More corporate execs need to do this.

He also knows this will affect their bottom line because folks will tighten their belts.

truthisfreedom

(23,155 posts)
10. I don't believe that Costco can afford to "share the burden" of tariffs based on their business
Sat Jun 1, 2019, 01:13 AM
Jun 2019

model. I believe that they operate on a very thin margin and the model falls apart when huge tariffs are present.

KY_EnviroGuy

(14,494 posts)
15. Probably not and still keep the market analysts and shareholders happy.
Sat Jun 1, 2019, 02:14 AM
Jun 2019

From just a quick (amateur) look at the numbers on Marketwatch, their margins are pretty thin although I'm not sure it's fair to compare with WMT and TGT because neither of those are buyer's clubs.

Regardless, the market will punish hell out of them if they allow their financials to fall to benefit consumers.

I do give them a degree of credit for appearing to be more socially conscious than most other retailers and for treating employees better than most.

obamanut2012

(26,142 posts)
22. Would you like them to quit giving their employees health insurance and paid time off?
Sat Jun 1, 2019, 02:03 PM
Jun 2019

They already operate on a thin margin, while treating their employees well, so either prices go up or their employees suffer. Which would you rather happen?

truthisfreedom

(23,155 posts)
8. COSTCO rocks.
Sat Jun 1, 2019, 12:35 AM
Jun 2019

They do an amazing job of most everything. It’s almost impossible to get a parking spot in their lot all day every day of the week. Their prices are amazing. The serve as a one-stop shop for so many small stores. I’m stunned by their business model.

yardwork

(61,711 posts)
20. It's illegal for publicly traded companies to reduce profits to shareholders.
Sat Jun 1, 2019, 01:45 PM
Jun 2019

Literally, it's against the law. Publicly traded business have a legal obligation to return profits to shareholders.

marybourg

(12,634 posts)
36. Their primary legal obligation is to their shareholders.
Sun Jun 2, 2019, 12:32 AM
Jun 2019

But there’s nothing stopping a corporation from reducing profits in good faith. Happens all the time.

Meadowoak

(5,560 posts)
29. That should be displayed on the door of every store
Sat Jun 1, 2019, 02:34 PM
Jun 2019

So many people are misinformed and think that China or Mexico is paying the tariff. When it's brought to their attention that is the customer that is paying, maybe they will pay more attention to what Trump's actions are doing to them.

Aussie105

(5,436 posts)
14. Prices are bound to go up.
Sat Jun 1, 2019, 01:58 AM
Jun 2019

Depending on the tariff on the items, of course.
There my even - gasp- be a price increase snuck in on non tariffed items, just because some can.

Hopefully the Trump supporters will see price rises and put the cause of it at Trump's feet, along with the tax relief they didn't get.

They are going to wake up some day, hopefully. Trump can't live up to his promises, to say the least.

Talitha

(6,618 posts)
19. Tariff tax question...
Sat Jun 1, 2019, 10:15 AM
Jun 2019

Shitler announces a tariff.
Stores and manufacturers raise prices.
We wind up paying more.

So what does the Govt do with this new windfall of tax money?

Is it held in a special fund somewhere, or is it secretly being re-directed into Shitler's pocket?

Talitha

(6,618 posts)
25. Sounds like I misunderstood things...
Sat Jun 1, 2019, 02:19 PM
Jun 2019

From what I understood, tariffs are taxes on goods. But instead of the other country paying the tariff, WE would wind up paying them - via rate hikes on the products.

yardwork

(61,711 posts)
28. Correct. The purpose of tariffs is to drive up prices.
Sat Jun 1, 2019, 02:33 PM
Jun 2019

It works like this: American company complains that Chinese companies charge less for similar products. That encourages people to buy the lower-cost Chinese product. If a tariff is placed on the Chinese product, then the idea is that people will buy the lower-cost American product. This protects American companies, supposedly.

The trouble is that there aren't equal American products just waiting in the wings to be purchased. In practice, tariffs lead to trade wars, as each side retaliates by raising prices. The consumer loses. And the US becomes more isolated. Entrepreneurship and development of new products declines, as the ready sharing of raw materials is hampered.

roamer65

(36,747 posts)
33. A tariff is similar to a VAT.
Sat Jun 1, 2019, 05:25 PM
Jun 2019

Value Added Tax. They are common in Europe and both kill consumption.

I can say already what has happened as the business I work for was slapped with a 300 percent tariff on materials we were purchasing from China. We sourced in the US, but the American producers also raised their prices significantly to match the new Chinese tariffed prices. Money grubbers.

Inflation is going to go through the roof folks.

SergeStorms

(19,204 posts)
34. I must have missed Walmart's announcement.
Sat Jun 1, 2019, 06:07 PM
Jun 2019

From what I've heard they've already raised prices on many things. I don't suppose they'd want to get their buddy, Trump, upset though. Announcing price hikes might get Donnie Dim-Wit upset. They're hoping he'll cut their taxes again and provide them with another unwarranted windfall. That's what the wealthy do, take care of their own.

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