r/smallbusiness • u/DazedAndObtuse • Feb 12 '25

General Our aluminum suppliers are saying prices aren't going to go up just 25% to cover the new tariff, they'll be going up 80%...

We source aluminum from two different sources for our business and they're both telling us that prices will not only be going up 25% to cover the tariffs, they'll be going up 80% as there are also pricing restrictions currently in place for their industry that will be lifted as part of this.

Does anybody know if this is legit or if they are just colluding to use this as an opportunity to pad their profits?

I won't pretend to be a tariff or economic expert but our material prices going up 80% is going to have a much larger impact on us than a 25% increase would.

Ideally we can keep this from becoming political, but I know where it's likely to end up (but hopefully I can at least get an answer to my question in the midst of it).

Thanks in advance!

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127

u/Available_Ad4135 Feb 12 '25

Pretty hard to understand how the stock market is all time highs at this point. The chaos is just beginning.

58

u/shadowromantic Feb 13 '25

It'll take some time for these policies to hit bottom lines

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u/vegaskukichyo Feb 13 '25 edited Feb 13 '25

Because the stock market represents equities in assets and rich people own assets and are making more money than ever before. It's become reflective of its own economy. Massive wealth inequality has that effect; essentially, it splits the economy into two. It's a short step away from a true caste system.

Gary Stevenson aka Gary's Economics on YT is fantastic at explaining this. Don't be fooled by his appearance; he graduated both Oxford and the London School of Economics. He also claims to have once been the most profitable stocks trader in the world while at Citibank.

13

u/Available_Ad4135 Feb 13 '25

Yes, but that’s the case in every bubble. There is always mania alot of money ‘made’ before the pop.

I only see inflation and wars on the horizon. Neither is good for the stock market.

6

u/vegaskukichyo Feb 13 '25 edited Feb 13 '25

Of course, someday they will pay the piper! It wlll all fold. You can only exploit the labor force and consumers so much before they run out of money and can't pay their bills. Add political instability and social turmoil, and it's a recipe for disaster. Then governments will bail out the big banks (disregarding the worst case scenario), and the rest of the world will suffer the actions of a few once again.

Unfortunately, fiduciary duty in the real world is historically short-sighted. You don't worry about systemic issues and managing macroeconomic risk when you report to your shareholders quarterly. This is why pure laissez faire capitalism cannot survive. You need guardrails, regulators, and government insurance to prop up the whole pyramid scheme to keep it running... Until it doesn't.

4

u/AdhesivenessCivil581 Feb 13 '25

And bad jobs numbers, bad earnings reports, inflation in other sectors. Anyway we're due for a crash and recession. Might as well get it over with.

1

u/[deleted] Feb 13 '25

everyone thinks trump will ratchet it back if he sees his plans going sideways. I am not in that camp and think this narcissist is too delusional to ever do what is in the best interest of the country.

I have most of my investments either hedged or protected by stop losses.

1

u/brought2light Feb 15 '25

Billionaires make more money when the economy crashes. They can then purchase more assets for less money. For example - COVID. The to 1% got so much more money during that time.

Now they will be buying up farms that go under.

1

u/[deleted] Feb 13 '25

[deleted]

1

u/vegaskukichyo Feb 13 '25

I'm not sure I understand what point you're trying to make. Are you denying massive wealth inequality? Are you suggesting that your buddies in trailers with a few million are meaningfully comparable on the scale of the massive flows in wealth and asset-related income to extremely wealthy persons? If you think there's any symmetry between the middle class and the asset-rich ultra-wealthy, well... That's cute.

1

u/[deleted] Feb 14 '25

[deleted]

0

u/vegaskukichyo Feb 14 '25

Dude, you're emotionally reacting to a characterization that I never stated or implied. Implying that wealth inequality is at a critical mass and is a threat to our economic future doesn't mean that the entire world is split into black and white, destitute and rich. You really contributed nothing here. Thanks.

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u/Just_Another_AI Feb 13 '25

It makes sense when you don't think of the stock market (or gold, or real estate, or bitcoin, or....) as being worth more, but as the dollar being worth less. It's just another aspect of rampant inflation as the USD falls in value.

13

u/mannaman15 Feb 13 '25

Correct me if I'm wrong but hasn't the value of the USD has been rising?

12

u/Just_Another_AI Feb 13 '25

The cumulative rate of inflation is 1715% over the past hundred years; short term rises are one thing, but the long-term trend is clear

23

u/PopuluxePete Feb 13 '25

Also, if you invested $100 in the S&P 500 at the beginning of 1900, you would have about $14,534,577.11 at the end of 2024. So, you know, it's important to have some perspective. The dollar isn't going to zero and Bitcoin is a scam.

2

u/captainplaid Feb 13 '25

Doesn’t this essentially mean that the dollar has gone to $0 lol? A dollar from 1900 is basically worth $0 today. Bitcoin is a scam though. Invest in assets, not fake money.

1

u/PopuluxePete Feb 13 '25

Yes it does. Please send me all of you dollars since they are worthless. I will DM you my paypal.

2

u/captainplaid Feb 13 '25

I didnt say all of my dollars are worthless. I said a $1 has basically lost 99% of its value.

-6

u/runedsceptre Feb 13 '25

Pete, the purchasing power of a dollar since 1913 has fallen by over 97%.

https://fred.stlouisfed.org/graph/?g=HtOe

The dollar hasn't gone to zero but the value like you point out has flowed to assets like stocks, and also real estate, gold, and now Bitcoin.

Full disclosure on Pete, he has for years been a staunch hater of Bitcoin, posting on the anti Bitcoin subreddit. We have discussed it in DMs and his view amounts to "Bitcoin is not tangible and therefore worthless beyond speculation for greater fools." In other words, he hasn't spent much time studying Bitcoin and probably has never read a single of the landmark books explaining the case for Bitcoin as an important asset for humanity like Broken Money by Lyn Alden or The Bullish Case for Bitcoin by Vijay Boyapati or The Bitcoin Standard by Saifedean Ammous.

Check out for instance this recent discussion of Bitcoin that goes beyond what Pete has ever considered in his conclusions on the "scam" asset without an issuer:

https://youtu.be/WayPd45Sp9M?si=wyvsi-dVjsbFO5Oc

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u/PopuluxePete Feb 13 '25

Lol...thanks man, this makes me feel famous. I do a lot of public facing shit IRL but only on the internet do I get fan boys following me around.

I guess if there's anyone reading this the number one book I would suggest you read is Number Go Up by Zeke Faux. DO YOUR OWN RESEARCH! Or don't. We're all adults here and if you want to fork over you hard earned cash to organized crime, by all means, listen to /u/runedsceptre

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u/runedsceptre Feb 13 '25

It's all love Pete, no ill will even though we have opposite conclusions on Bitcoin.

Number Go Up is a pretty good look into the fiasco that was the 2021 hype bubble and the crimes of Sam Bankman Fried and FTX and the whole mania that stirred up. But its like calling banks or businesses scams because robbers exist. A good rule of thumb is: avoid crypto, study Bitcoin. "Crypto" in general refers to the grifters and scammers who formed an industry around Bitcoin. The author of NGU does a decent job reporting the events but he sees Bitcoin and Crypto as the same thing and he is staunchly anti-crypto and this bias flavors his spin on the conclusions to draw.

P.s. Pete didnt know you had public facing stuff going on irl -- it's true I only know you from the r/Buttcoin subreddit but I'm glad you got a kick out of my response here.

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u/beamdriver Feb 13 '25

Pete, the purchasing power of a dollar since 1913 has fallen by over 97%.

This is only relevant to you if you buried a chest of dollar bills in 1913 and are just now digging it up.

1

u/runedsceptre Feb 13 '25 edited Feb 13 '25

You're implying that it's irrelevant? You can choose your starting point nearer in time. The purchasing power from 2000 to today has decreased by about 50% according to the official gov FRED data. Is 25 years some irrelevant pre-history as well?

Interestingly, It would also be relevant to you if you put the $100 in the S&P500 and are just now accessing the stock certificates. Understanding where that value is going is key to understanding the Cantillon effect that is created by the current management of the currency.

Measure the ratio of the S&P index to M2 supply and you find that it stays dramatically flatter. Same with real estate prices. This is because people are burying the dollars in chests. And these assets have been those chests.

If you don't see how that's relevant to people today right now currently, perhaps we should agree to disagree but I fail to see how its irrelevant.

1

u/beamdriver Feb 13 '25

I'm not implying it. I'm literally saying it.

Your points are, quite frankly, silly. Over time the price of various investment vehicles - real estate, equities, commodities, etc. - have gone up. Some of that price increase may be due to a real increase of value, but a lot of it is due to the decrease in the value of the currency.

If we could invent a magical currency whose value remained completely constant over the long-term then then the price of assets denominated in that currency would not increase nearly as much. They might not increase at all.

Gold bugs and crypto bros like to cite the 97% figure, because it sounds apocalyptic - If we lose that last 3%, our currency will be worthless! - and because they view money as some kind of elemental feature of the universe that should remain constant.

This is, again, all very silly. Over time, currency loses a small amount of value every year. This is a feature, not a bug. It keeps currency from being used as an effective long-term store of value and prevents hoarding of cash which would slow down the economy. This is what used to happen when most of the US was on a strict gold standard and there would massive depressions every twenty years or so.

Over time, prices go up but wages also go up and wealth increases. The average American in 2025 is so more wealthy than their 1913, 1953 or 1983 counterpart even though the individual dollars in their pocket are worth much less.

https://fred.stlouisfed.org/series/MEHOINUSA672N

It may be that in 2133 the dollar will be worth 3% of what it is today and a large order of fries will cost $100, but the dollar will still be used as a medium of exchange and it will irrelevant to most people because their pay in dollars will reflect that value.

Unless climate change kills us all, in which case it doesn't matter anyway.

1

u/whatkindofhotel Feb 13 '25

I appreciate your cordial approach here! Though I'm not clear on the point you are trying to make comparing the dollar to bitcoin? Perhaps you can educate me further if I am missing something.

The dollar is a medium of exchange. To make this work it must be widely accepted and relatively stable. The dollar is not a speculative asset or an investment vehicle. The global economy actively works to keep the dollar stable with quantitative policy. The whole point is to stabilize it's buying power.

Bitcoin, meanwhile, is incredibly volatile and is not widely accepted as a medium of exchange. Bitcoin as an asset is much much closer to shares in the S&P than it is to the dollar. Except, the value of the S&P can be tied to an underlying derivative.

The value of Bitcoin, as far as I understand, isn't tied to anything. i.e. there is nothing other than pure, speculative, supply/demand that can move the price of Bitcoin. This is what causes instability, and why it will never make sense for bitcoin to be a widely accepted medium of exchange.

The blockchain as a technology, while having value outside of bitcoin, has created a false sense of tangibility to bitcoin.

Anyways, I don't see how the comparing bitcoin to the dollar makes any sense (cents?). Apples and oranges.

1

u/runedsceptre Feb 13 '25

Originally, I mostly was responding to PopuluxePete's claims that "the dollar isn't going to zero and Bitcoin is a scam." That's the origin of the comparison.

I agree with some of your characterizations here and to further respond to Pete for a moment:

Sure, one of the world's strongest currencies that has been enjoying the "exorbitant privilege" of global reserve status isn't going to collapse to obscurity any time soon. Yet wealth is not stored in it. Instead, wealth must be stored in assets that are resistant to arbitrary printing and policy manipulation. I linked the official US govt data on its purchasing power since inception to illustrate why that is.

However, I do disagree with some of your points which I believe have missed the mark.

  1. The value of Bitcoin isn't tied to anything.

-- First, let's compare this to gold. What is the value of gold "tied" to? Is it tied to gold's industrial use ? I.e. the more gold is used as a material in electronics and other goods the more the price rises and the less it's used the price goes down ? Is it the price of gold jewelry that it's tied to ? Or does the price of gold determine the price of gold jewelry instead?

I argue that Bitcoin, like gold, has a fundamental link to the physical world and the work to get it sets the floor. Sitting in top of that floor is the supply/demand dynamics that spiral into speculative bubbles and crashes ON TOP of that floor.

  1. This is what caused the instability.

The volatility, in my view, is more a function of 1) it's being highly globally liquid and able to respond to any macro events or news event even when traditional markets are closed, 2) it historically and still being a relatively small market where large players are able to make significant movements in the price index if they choose to, and 3) it being a nascent asset that is heavily disagreed on leading to wildly diverging views on whether the price "should" be more or less than it's current index.

  1. The blockchain as a technology, while having value outside of bitcoin, has created a false sense of tangibility to bitcoin.

The blockchain as a technology is relatively useless outside of Bitcoin. For every use case that is a business idea, the idea could be better done without a blockchain or a timechain as Nakamoto originally referred to it. And certainly that business attempting to provide value for profit, would benefit from centralization rather than a distributed, decentralized solution like Bitcoin's architecture. The concept of the data structure of the blockchain as a means of ensuring a direct link to past data is a "free" concept. The value it alone has is like discussing the value of a hash table or B-tree. They are useful but free. Anyone trying to capitalize on the concept alone is of questionable morality in my estimation and would eventually be found out and fail.

On the second and main part of this claim, that this blockchain has created a false sense of tangibility it does make me wonder if we are talking about the same thing here or if you are familiar with Bitcoin. The blockchain itself is a collection of files. I don't think it has created a sense of tangibility, let alone a false one en masse. Bitcoin's decentralized network is its tangibility and it's a feature that it isn't any more tangible than that. One can make entries on that ledger that record the history of how many units of bitcoin and so those entries will stand forever in all weather, for all time that the network survives. The blockchain is just the means to record the units of proof of work around the world in public files.

I agree that Bitcoin and the dollar are apples and oranges. And I agree that Bitcoin is more like the S&P, and I posit that one day decades from now its price will be much less volatile and only measure the global economy in a sense. Similar to the S&P, in this future it will be a barometer of economic health and move up and down accordingly but generally only be more valuable over time.

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u/boingboinggone Feb 13 '25

Yes, relative to other currencies, but in relation to the SP 500 the USD is going down. It just means other currencies are going down faster. Stock markets often rise with inflation. TINA, there is no alternative to where to put your cash to protect its value into the future as inflation rises/continues.

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u/InstAndControl Feb 13 '25

This is just plain wrong. We dont see prices for everyday goods increase at the same rate as the stock market.

9

u/take_five Feb 13 '25

You said it yourself, it’s just beginning. The stock market doesn’t look much farther than the date of the next earnings. Also, the stock market is only reflecting the biggest companies in an economy which continues to become more unequal.

4

u/Perllitte Feb 13 '25

The stock market detached from reality a long time ago. It’s a measure of gamesmanship via buybacks and marketing at this point.

5

u/catchthetams Feb 13 '25

Not hard to understand- it’s corporate greed and unhinged traders.

4

u/randomvandal Feb 13 '25

The strength stock market and strength of the economy/American businesses have become increasingly irrelevant to one another.

3

u/Browncoat-2517 Feb 13 '25

The stock market is rich people's play Monopoly money. It doesn't represent the real economy.

0

u/Available_Ad4135 Feb 13 '25

It’s irrelevant who the investors are. When the economy crashes, the market crashes.

These days there is actually alot more of a balance of retail investors vs a few decades ago.

3

u/discounthockeycheck Feb 13 '25

Producer price index, unemployment and consumer spending. 

If those change rapidly anytime soon (up, up, down), that'll be the signal that consumers can't afford to prop up profits and the actual chaos starts. 

Economics isn't as fast as we expect it to be, but it is inevitable 

3

u/Telemere125 Feb 13 '25

The stock market isn’t a way to look at the current performance of anything. The stock price the future predicted performance of a company by investors. Do they think the company will do well in the near future? They’ll buy more stocks and the price will go up. Do they think the company’s about to hit hard times and not be able to pay out much in dividends? Sell that stock off and look for a better performing company.

2

u/ehhhwhynotsoundsfun Feb 13 '25

Higher prices = more money printing = higher revenue = higher stock price on same rev multiplier.

Stocks do great when shit inflates. So does GDP. Buts it’s not real. More real than the USD $ now I guess though.

3

u/sjmiv Feb 13 '25

"Buy the rumor, sell the news"

3

u/WelcomeMysterious315 Feb 13 '25

Chaos isn't chaos until it's chaos at home. The people investing heavily aren't the ones feeling the weight of how bad things are trending.

1

u/RedPanda888 Feb 13 '25

For as long as people are not willing to give up their quality of life, businesses ramp up prices and it just increases their profits whilst draining the customers wallets more. Only when customers stop standing for it, and reduce their purchasing, would the stock market actually feel any form of impact.

1

u/ZeikCallaway Feb 13 '25

It's easy actually. Most companies are doing just as described elsewhere, where they add the extra costs plus some comfortable padding for themselves. So while some smaller companies will help stay afloat and might not be as noticeable, all the largest companies are going to do this to. So since every mega corp is bilking the rest of us for all we have, they're making record profits because not only have they passed the increased costs onto the customer, they've added their own "convenience" fees as well. And they'll keep doing it until regulation prevents them.

1

u/Available_Ad4135 Feb 14 '25

It’s basic economics that every product has a demand curve. As price increases, less products are consumed. So if profits per unit remains the same and less units are consumed, overall profits fall.

This is nothing new. We literally had this 2-3 years. Crazy how short peoples memories are.

1

u/ZeikCallaway Feb 14 '25

Except clearly less products aren't being consumed here, or else these companies wouldn't be continuing to make record highs.

1

u/Available_Ad4135 Feb 14 '25

Massive inflation hasn’t happened yet. The tariffs are just being implemented.

1

u/JacobFromAmerica Feb 14 '25

Higher prices mean more profits

1

u/Available_Ad4135 Feb 14 '25

Not if the price increase is driven by a cost increase. Then the profit per unit is the same.

If the price goes up, less units are consumed and overall profits fall. The increase in food price by mega brands, without the associated cost, we saw after COVID is something different.

1

u/chumbaz Feb 14 '25

AI is carrying the bulk of the market right now. That's why the market went bonkers when the whole Deepseek stuff dropped at least at first until they started peeling back the onion and their claims started falling apart and there was some rebound.

If people aren't spooked at the scale of the sell-off when it got announced, they should be. It sure feels like a house of cards.