‘Fertile Environment For Price-gouging’: Lawmakers Hone In On Use of Tariffs To Rip Off Consumers
Democrats look for enforcement action against unwarranted price hikes
A large group of Democrats on Capitol Hill are zeroing in on companies that would use Donald Trump’s tariff policies as a pretext to exploit US consumers.
Send Sheldon Whitehouse, of Rhode Island; Ruben Gallego, of Arizona; Elizabeth Warren, of Massachusetts; Cory Booker, of New Jersey; and Rep Rosa DeLauro, of Connecticut led 31 of their Senate and House colleagues in demanding that the Federal Trade Commission (FTC) investigate which large companies are using the Trump tariff policies — and the confusion surrounding them — as an excuse to raise prices in excess of actual cost increases, and to prosecute individuals and companies that price-gouge American consumers.
Trump has, for months, been in a cycle of imposing — and then delaying tariffs — on US trading partners. Large retailers like Walmart have warned that US consumers would see higher prices as a result.
Trump’s indiscriminate tariff policies and chaotic implementation have created instability for business owners and American consumers. While small businesses have no choice but to pass rising supply costs onto customers, giant corporations have more leeway on their balance sheet to withstand increased costs, can force their suppliers to bear some of the tariff costs, and can wield significant political pressure to lobby for carve-outs for their business, the Democrats behind this effort said.
“President Trump’s on-again, off-again tariffs build an especially fertile environment for price-gouging. The new tariffs have created a cloud of uncertainty that gives companies cover to raise prices on all goods, regardless of whether they are subject to new tariffs or whether their costs have meaningfully increased, above and beyond what is necessary to cover any cost increases,” the members wrote.
They continued: “While small businesses operating on thin profit margins will be forced to pass on many costs to stay afloat, the chaotic and sweeping nature of President Trump’s tariffs is especially conducive to price gouging by large companies with significant market power […] Even if President Trump decides to reduce or eliminate tariffs, companies may nonetheless decide to maintain higher prices—or raise them even further, claiming ‘market uncertainty.’”
Even though Trump has temporarily paused many of the most drastic tariffs he threatened to impose on “liberation day,” businesses have already raised prices in response to the announced tariffs, and are unlikely to lower them. As Federal Reserve Chair Jerome Powell explained last month, manufacturers may even raise prices on non-tariffed goods to “follow the crowd” and increase their profits.
To prevent this type of corporate price gouging at the expense of working families, the members urge FTC Chair Andrew Ferguson to fulfill his public commitment and to ensure Trump’s trade war is not a “green light” for price gouging.
“Armed with the knowledge that the FTC has turned a blind eye to this price-gouging tactic, companies now have free rein to use surveillance pricing to price gouge consumers,” the Democrats wrote. “A former FTC official said, ‘The message that is coming out of this administration…is that the watchdog is gone and companies feel emboldened to rip people off.’ We urge you to fulfill your public commitment and to ensure President Trump’s trade war is not a ‘green light’ for price gouging.”
The text of the letter is available as a PDF here.
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