This is such an interesting point that Powell made yesterday that people missed. He said that "the tariffs are mostly being paid by the companies that sit between the exporter and the consumer... All of those companies and entities in the middle will tell you that they have every... intention of passing that through [to the consumer] in time." What he was describing is the hidden squeeze happening in the supply chain. Importers, wholesalers, and retailers are paying higher costs upfront and hoping they can eventually raise prices enough to shift the burden. The problem is that consumers are already tapped out. Household budgets are under pressure from rising debt, delinquencies, and wages that do not stretch far enough. Trying to pass along tariff costs in this environment would push demand even lower. Businesses know this, which is why many of them are absorbing the costs instead. But when they do that, their margins shrink, and it becomes harder to sustain operations without making cuts elsewhere. When profitability gets pressured, management has few options. They cannot control tariffs, and they cannot force consumers to spend more. What they can control are expenses. That begins with slowing hiring and scaling back growth plans, then cutting hours and overtime. If conditions do not improve, the inevitable step becomes layoffs. We are already seeing the early signs of this play out. Companies in trade-exposed industries like manufacturing, shipping, and retail are quietly trimming staff. These are the first cracks, but history shows that once the cycle begins, it rarely stays contained. If tariffs remain in place and consumers stay weak, the ripple effects spread further into the labor market. This is the real chain reaction in my opinion, Powell was hinting at. Tariffs may look like a policy directed abroad, but the costs end up at home. They filter through supply chains, eat away at margins, and eventually show up in the form of job losses.show more

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