Corporations Are Using Trump's Tariffs To Make Exorbitant Profits From Consumers

There's a reason why corporations have been silent about Trump's tariffs lately. It's because they are using the tariffs as an excuse to raise prices and make exorbitant profits. Robert Reich explains:

As Trump’s tariffs and his war with Iran drive up prices of everything from oil to steel, you’d think big American corporations would be screaming bloody hell. Presumably, Trump’s tariffs and war are squeezing their profits just as they’re squeezing the wallets of average Americans.

To the contrary, corporate America is quietly encouraging both Trump’s war and Trump’s tariffs. Why?

One possibility is they’re raking in money off the war as defense contractors and suppliers. 

Some surely are, but this can’t account for the acquiescence if not outright support by most big American corporations that have nothing to do with the defense-industrial complex. 

Another possibility is they don’t want to piss off Trump, fearing his retaliation.

 

But if they were really concerned about the negative effects of Trump’s war and his tariffs on their bottom lines, surely they’d be using their armies of lobbyists and piles of campaign contributions to stop his war and his tariffs. After all, that’s what the armies and piles are for. 

There’s a much simpler explanation for corporate America’s silence if not encouragement. In point of fact, both Trump’s war and Trump’s tariffs are helping their bottom lines. 

Trump’s war and his tariffs are allowing domestic U.S. producers to raise their prices to match the elevated prices of imports. And those who aren’t directly affected are using the higher import costs as excuses to raise their prices, too.

Presto! — corporate profits have exploded, and their stock prices have soared.

 

But American consumers are getting shafted. Both Trump’s war and his tariffs are pushing up prices for a vast range of goods and services. The result is a massive redistribution of income and wealth from American consumers to big American corporations. 

This is the story of the American political economy under Trump that’s rarely if ever told, but it’s critical to understanding why Trump has been getting away with his war in Iran and his tariffs without much political opposition.

 

Start with oil. 

Brent crude is now selling for $90.05 a barrel. If the war drags on it could push crude prices much higher, especially if it further depletes oil inventories, and spreads to Houthi militants starting a naval blockade in the Red Sea and to other Gulf states.

Oil prices are set globally. As global supplies dwindle, oil prices rise across the board — including prices charged by domestic U.S. producers. They’re enjoying a huge windfall.

 

With crude oil prices averaging $95 a barrel between March and June — up from about $66 before the war — ExxonMobil, Chevron, ConocoPhillips, and Occidental Petroleum have collectively raked in some $31 billion in earnings for the second quarter of this year, according to FactSet estimates. 

That’s up from about $12 billion for the same period last year.

 

These windfall profits have helped boost Big Oil’s stock prices. Big Oil’s investors and executives (who are paid partly in shares of stock) have done wonderfully well. 

But American consumers are bearing the burden, as gas prices once again soar past $4 a gallon, a dollar more than they were before Trump started his war on February 28.

 

So is it any wonder that Big Oil isn’t criticizing Trump’s war, and is quietly rooting it on?

Or consider steel. Trump imposed steel tariffs of 50 percent in March and June 2025. These tariffs have driven up steel prices in the United States.

 

The tariffs have been a boon to American steelmakers, who have raised the prices they charge their American customers to match the higher prices now charged for steel from abroad. 

As a result, leading American steel producers like Nucor and Steel Dynamics report significant year-over-year earnings increases.

Nucor’s profits in the second quarter of 2026 were $1.16 billion, up from $603 million a year earlier. Steel Dynamics has reported a second-quarter income of $534.1 million, nearly double its net income compared to the same period last year. A third U.S. producer, Cleveland-Cliffs, earned $97 million in the second quarter of this year (before interest, taxes, depreciation, and amortization), compared to a loss of $213 million last year, and the firm anticipates doubling earnings next quarter. 

Who’s bearing these higher costs? American consumers of steel — in the prices of everything we buy that contains steel (such as cars and appliances). 

The Producer Price Index (a widely used proxy for input costs) for steel mill products is now sitting at its highest point since May 2023. 

American-based producers that utilize oil and steel have been able to pass those costs on to their customers without harming their profit margins. Some corporations that don’t depend on oil or steel have used the higher import costs as excuses to raise their prices, too. 

Hence, Trump’s war and Trump’s tariffs are wins for corporate America. Profit margins are up, the value of shares on the stock market are up. Shareholders are happy.

 

Big corporations aren’t raising a fuss about the war or tariffs because they like what’s happening. 

But American consumers are getting shafted. Their wages aren’t keeping up with the price increases. Yet they have no alternative but to pay the higher costs for energy and steel and everything else — which is the whole point. 

As the inflationary effects of Trump’s war and his tariffs (taxes) on imports spread throughout the economy, they’re hiding what’s really occurring: an upward redistribution from consumers to big American corporations. 

American consumers need to know the truth: Two of the major reasons why everything is less affordable are Trump’s war and his tariffs. 

Consumers may not have armies of lobbyists and piles of campaign contributions to do their bidding, but they do have a way to express their disapproval. They can vote out Trump Republicans on November 3.

Private Equity Turns Businesses Into Short-Term Profit Centers

The following post is by former Labor Secretary Robert Reich:

Last week, Paramount announced that it will be selling Simon & Schuster, one of the biggest and most prestigious publishing houses in the United States, to the private-equity firm KKR, for $1.62 billion.

The acquisition vastly increases the influence of financial interests over book publishing. 

This worries me because it continues a trend that began years ago — elevating profits above the love of publishing books. 

When I published my first book decades ago, the purpose of most publishing houses was to publish books. Publishers made money in order to publish books. They earned enough on their big bestsellers to take chances on unknown authors like me and put out books that delighted small numbers of enthusiastic readers but never showed a profit. 

But in more recent years, the major purpose of most book publishers has switched from publishing books to making money.

 

After KKR takes over Simon & Schuster, this prestigious publishing house won’t be taking risks on unknown authors or putting out wonderful books that appeal to small numbers of enthusiastic readers. It’s going to be a profit center for one of the biggest private equity firms on Wall Street, dedicated exclusively to making money. 

The same dynamic has infected other parts of the economy. News organizations once made money in order to report the news. Now, news organizations exist in order to make money.

 

For years, CBS News was insulated from the commercial side of CBS. This allowed Edward R. Murrow and Walter Cronkite to report what they thought the public needed to know. Today, most network and cable news has to show a profit. It’s been a slippery slope leading to Fox News’s shameless pandering to the lies and bigotry its viewers find entertaining.

 

Hospitals and health insurers once made money in order to provide health care. Now, hospitals and health insurers provide health care in order to make money.

Blue Cross and Blue Shield began as nonprofits that insured all comers. But as big profit-seeking insurers targeted younger and healthier people, the Blues were left to insure the older and less healthy, which made it impossible for them to continue. They turned to making money. Now, private equity runs hospitals, into the ground.

And so on.

I was reminded of this distinction — between making money in order to provide particular products and services, and providing products or services in order to make money — while watching the magnificent series “The Bear,” now streaming on Hulu.

If you haven’t seen it, I won’t give away the plot except to say that the major characters want to create a great restaurant. Each has a backstory that reveals why this is so important to them.

Making money is the means to achieving their dreams, but they aren’t in it for the money. They’re in it to produce wonderful food, served with perfection. This transcendent goal is central to their own self-worth. It gives each of their lives purpose and meaning.

It’s still possible for businesses to exist in order to produce wonderful goods and services. I know many retailers, small manufacturers, and professionals who do what they do mainly for the love of it. (My father ran a clothing store, and although he worked seven days a week, making money was secondary — enabling him to keep his family afloat and continue to do what he loved.)

But the financialization of the American economy has turned almost all larger businesses into profit centers. Private equity in particular has leached out every other value.

When I ask my former students how they like their work, I often hear the same story. “I like it well enough,” they say, often with a tinge of regret. “But the money people won’t let me do what I’d really love to do.”

Corporations Aren't Covering Costs - They're Price Gouging

Businesses would like you to think they have been forced to increase prices to cover the increase in their costs. But what they won't tell you is that they're using inflation to raise their prices far beyond their costs. In short, they are price gouging their customers.

Here is part of a New York Times article on this:

A year ago, a bag of potato chips at the grocery store cost an average of $5.05. These days, that bag costs $6.05. A dozen eggs that could have been picked up for $1.83 now average $2.90. A two-liter bottle of soda that cost $1.78 will now set you back $2.17.

Something else is also much higher: corporate profits.

In mid-October, PepsiCo, whose prices for its drinks and chips were up 17 percent in the latest quarter from year-earlier levels, reported that its third-quarter profit grew more than 20 percent. Likewise, Coca-Cola reported profit up 14 percent from a year earlier, thanks in large part to price increases.

Restaurants keep getting more expensive, too. Chipotle Mexican Grill, which said prices by the end of the year would be nearly 15 percent higher than a year earlier, reported $257.1 million in profit in the latest quarter, up nearly 26 percent from a year earlier.

Although food companies are prominent examples of how rapid inflation is being passed from producers to consumers, the trend is evident across a wide variety of industries. Executives from banks, airlines, hotels, consumer goods companies and other firms have said they are finding that customers have money to spend and can tolerate higher prices. . . .

For years, food companies and restaurants generally raised prices in small steps, worried that big increases would frighten consumers and send them looking for cheaper options. But over the last year, as wages increased and the cost of the raw ingredients used to make treats like cookies, chips, sodas and the materials to package them soared, food companies and restaurants started passing along those expenses to customers.

But amid growing concerns that the economy could be headed for a recession, some food companies and restaurants are continuing to raise prices even if their own inflation-driven costs have been covered. Critics say the moves are all about increasing profits, not covering expenses. Coca-Cola, PepsiCo and Chipotle did not respond to requests for comment.

“The recent earnings calls have only reinforced the familiar and unwelcome theme that corporations did not need to raise their prices so high on struggling families,” said Kyle Herrig, the president of Accountable.US, an advocacy organization. “The calls tell us corporations have used inflation, the pandemic and supply chain challenges as an excuse to exaggerate their own costs and then nickel and dime consumers.”

So far, food companies and restaurants have been able to raise prices because the majority of consumers, while annoyed that the trip to the grocery store or drive-through for takeout costs more than it did a year ago, have been willing to pay. But there are plenty of shoppers, including those with lower incomes or retirees on fixed budgets, who say the higher prices have led to changes in their routines. . . .

Over the last year, the price of food eaten at home has soared 13 percent, according to the Bureau of Labor Statistics, with some items spiking even higher. Cereals and bakery goods are up 16.2 percent from a year ago, closely followed by dairy, which has risen 15.9 percent.

The cost of eating at restaurants has risen 8.5 percent over the same period.

Corporate Profits At Highest Level Since 1950

Republicans would like for you to believe that corporations need more tax relief, and cannot afford to pay workers a higher salary. Neither is true. Corporate profits are at a 72 year high. They have not been this high since 1950. And in 1950, the top tax rate was 90%, and the minimum wage was worth significantly more in buying power than it currently is.

From Bloomberg News:

A measure of US profit margins has reached its widest since 1950, suggesting that the prices charged by businesses are outpacing their increased costs for production and labor.

After-tax profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, improved in the second quarter to 15.5% -- the most since 1950 -- from 14% in the first quarter, according to Commerce Department figures published Thursday.

The data show that companies overall have comfortably been able to pass on their rising cost of materials and labor to consumers. With household budgets squeezed by the rising cost of living, some firms have been able to offset any slip in demand by charging more to the customers they’ve retained -- though others like Target Corp. saw their inventories swell and were forced to discount prices in order to clear them. 

The surge in profits during the pandemic era has fueled a debate about whether price-gouging companies carry a share of the blame for high inflation -- an argument pushed by President Joe Biden’s Democrats. Most economists have been skeptical about the idea.  

US inflation has surged this year and stood at 8.5% in July, not far short of the previous month’s four-decade high. Federal Reserve officials have pointed to rising wages as one of the big risks that could keep inflation entrenched. But some economists say that historically elevated profit margins mean there’s room for businesses to accommodate worker demands for better pay without setting off a wage-price spiral.

Across the economy, adjusted pretax corporate profits increased 6.1% in the April-to-June period from the prior quarter -- the fastest pace in a year -- after falling 2.2% in the first three months of the year. Profits are up 8.1% from a year earlier. 

While companies report individual profits based on historical costs, the government adjusts the figures to reflect the current cost of replacing capital stock such as equipment and structures. Due to surging inflation, the current replacement costs are much higher.

Excluding that adjustment, as well as one for inventory valuation, after-tax profits climbed 10.4% in the second quarter. 

Profits More Important Than Lives For Gun Manufacturers

The following editorial is from the editorial board of The Washington Post:

Over the past week, a Florida jury has listened as medical examinerstestified in excruciating detail about the autopsies they performed on the 14 students and three staff members murdered in 2018 at Marjory Stoneman Douglas High School. Jurors heard how bullets fired from the AR-15-style rifle hit the victims with such force that they caused extensive and devastating damage, while the weapon’s rapid fire action magnified the carnage. Alaina Petty, 14, was shot four times; Martin Duque Anguiano, 14, was shot eight times; Carmen Schentrup, 16, was shot five times; Meadow Pollack, 16, was shot nine times.

That gruesome account — and the pain of parents who sobbed or fled the courtroom — resonated as we listened to the indifferent testimony of executives of companies that market assault weapons such as the one used in the Parkland school slaughter. Appearing Wednesday before the House Committee on Oversight and Reform, leading manufacturers of assault weapons that have been used in the country’s deadliest mass shootings said they bear absolutely no responsibility for the violence.

“I believe that these murders are a local problem that have to be solved locally,” said Marty Daniel of Daniel Defense, which manufactured the AR-15-style rifle that an 18-year-old used in May to murder 19 children and two teachers at Robb Elementary School in Uvalde, Tex. “I don’t consider what my company produces to be ‘weapons of war,’ ” said Christopher Killoy of Sturm, Ruger & Co., which produced the weapons used by mass shooters in Sutherland Springs, Tex., in 2017 and Boulder, Colo., in 2021.

There is no question, as the gun manufacturers argued, that the individuals who pull the trigger are culpable for their terrible crimes. The gunman in the Parkland shooting has pleaded guilty; the jury hearing the penalty phase of his trial will determine whether he is to be sentenced to death or to life in prison without parole. But gun companies can’t wash their hands of responsibility for the damage caused by their products — particularly when their marketing strategies are designed to appeal to angry, insecure, young males — the very demographic that is increasingly the profile of mass shooters. “Consider your man card reissued,” read one advertisement. Another: “Your status at the top of the testosterone food chain is now irrevocable.” To make it easier to obtain the weapons, the companies offer generous credit plans.

A report released by the House committee found that the country’s top five gun manufacturers have collected more than $1 billion in revenue over the past decade, much of it from the sales of assault-style weapons. At the same time, they have failed to take even basic steps to monitor the violence associated with their products. None of the companies have systems to track injuries and deaths caused by AR-15-style rifles, whether from accidental discharge, product malfunction or deliberate use. Nor do they monitor crimes committed with the products. 

It’s no surprise that the gun manufacturers fail to collect data that might make their products safer. Congress has provided them unique protection from legal liability. As a consequence, there is no disincentive to their irresponsible business practices when it nets them record-breaking profits. One would have hoped that Petty, Anguiano, Schentrup, Pollack and the other children lost to gun violence might give the gun industry some pause. Since that is clearly not the case, it is up to Congress to crack down.

Big Oil Is Engaged In An Obscene Price-Gouging

 

Americans, especially those in the poor and working classes are suffering from very high gas prices. Some want to blame President Biden, and others want to blame Vladimir Putin. Both are wrong! It's the Big Oil companies that are taking advantage of the current situation to increase their already exorbitant profits.

Here's part of how former Labor Secretary Robert Reich describes it:

Guess who’s making no sacrifice at all — in fact, who’s reaping a giant windfall from this crisis? 

As crude oil prices hit levels not seen in more than 13 years, Big Oil has hit a gusher. Even before Putin’s war, oil prices had begun to rise due to the recovery in global demand and tight inventories. Last year, when Americans were already struggling to pay their heating bills and fill up their gas tanks, the biggest oil companies (Shell, Chevron, BP, and Exxon) posted profits totaling $75 billion. This year, courtesy of Vladimir Putin, Big Oil is on the way to a far bigger bonanza.

How are the oil companies using all this windfall? I can assure you they’re not investing in renewables. They’re not even increasing oil production. As Chevron’s top executive Mike Wirth said in September, “we could afford to invest more” but “the equity market is not sending a signal that says they think we ought to be doing that.”  Translated:  Wall Street says the way to maximize profits is to limit supply and push up prices instead.

So they’re buying back their own stock in order to give their stock prices even more of a boost. Last year they spent $38 billion on stock buybacks — their biggest buyback spending spree since 2008. This year, thanks largely to Putin, the oil giants are planning to buy back at least $22 billion more. 

Make no mistake. This is a direct redistribution from consumers who are paying through the nose at the gas pump to Big Oil’s investors and top executives (whose compensation packages are larded with shares of stock and stock options). 

Though it’s seldom discussed in the media, lower-income earners and their families bear the brunt of the burden of higher gas prices. Not only are lower-income people less likely to be able to work from home, they’re also more likely to commute for longer distances between work and home in order to afford less expensive housing. 

Big oil companies could absorb the higher costs of crude oil. The reason they’re not is because they’re so big they don’t have to. They don’t worry about losing market share to competitors. So they’re passing on the higher costs to consumers in the form of higher prices, and pocketing record profits. 

It’s the same old story in this country: when crisis strikes, the poor and working class are on the frontlines while the biggest corporations and their investors and top brass rake it in.

Successful Businesses Should Share Profits With Employees

Since 1980, income for the richest Americans has grown by nearly 400%. Meanwhile, worker salaries have barely kept up with inflation, and some workers have fallen behind in buying power. This dilemma must be solved. One solution would be higher wages. Another would be for businesses should give employees a share of profits.

Here is part of what Robert Reich has to say about profit-sharing:

In light of the news this week that the economy has been growing at a record rate (and corporate profits are also hitting record highs, the stock market notwithstanding), several of you have asked me specifically what can be done to spread the benefits of economic growth. . . .

One idea is an old one that was tried with great success but is now all but forgotten. It’s called profit-sharing. It emerged from the tumultuous period when America shifted from farm to factory. In 1916, Sears, Roebuck and Co., then one of America’s largest corporations with over 30,000 employees, announced that it was embarking on a major experiment — profit-sharing. The firm gave workers shares of stock, making them part owners.

Shortly thereafter, the Bureau of Labor Statistics issued a report on profit-sharing, suggesting it as a way to reduce the “frequent and often violent disputes” between employers and workers. Profit-sharing gave workers an incentive to be more productive since the success of the company meant higher profits would be shared. It also reduced the need for layoffs during recessions because payroll costs dropped as profits did. 

Profit-sharing proved a huge success. Other companies that joined the profit-sharing movement included Procter & Gamble, Pillsbury, Kodak, and U.S. Steel.

By the 1950s, Sears workers had accumulated enough stock that they owned a quarter of the company. And by 1968, the typical Sears salesperson could retire with a nest egg worth well over $1 million (in today’s dollars).

There was a downside. When profits went down, workers’ paychecks would shrink. And if a company went bankrupt, workers would lose all their investments in it.  

The best profit-sharing plans have been in the form of cash bonuses that employees can invest however they wish, on top of predictable wages. At Lincoln Electric, for instance, which has had profit-sharing since 1934, employees receive a profit-sharing cash bonus worth, on average, 40 percent of their annual base earnings.

But profit-sharing with employees has all but disappeared in large corporations, which since the start of the 1980s — and the advent of corporate “raiders” (now private-equity managers) — have focused on maximizing shareholder returns. Sears phased out its profit-sharing plan in the 1970s (and filed for bankruptcy protection in 2018). 

Yet profit-sharing with top executives has soared — as big Wall Street banks, hedge funds, private-equity funds, and high-tech companies have doled out huge amounts of stock and stock options to their MVPs.

The result? Share prices have gone into the stratosphere while wages have barely risen. Researchers have found that increases in share prices before the late 1980s could be accounted for by overall economic growth. Since then, a large portion of the dramatic increases in share prices have come out of what used to go into wages. . . .

America’s trend toward higher profits, higher share prices, mounting executive pay, but near stagnant wages is unsustainable, economically and politically. How to encourage profit sharing? Corporate taxes should be lower on corporations that share profits with all their workers, and higher on those that don't. 

Sharing profits with all workers is a logical and necessary step to making the system work for the many, not the few.