Aug 12, 2019

More hidden fees may be on the way from Trump's China trade war

Illustration: Sarah Grillo/Axios

The U.S.-China trade war looks set to continue and likely escalate, bringing more tariffs to imports of Chinese goods, with the latest round adding a 10% charge to consumer products like clothing, toys and electronics.

Between the lines: Large retailers like Walmart and Target have said they will have no choice but to pass the cost of tariffs on to customers, but it's very likely the cost of the tariffs and many other increased charges won't be fully disclosed on price tags.

What's happening: Research from Diego Aparicio and Roberto Rigobon of MIT finds that in recent years it has become almost impossible for companies to raise prices. Instead they resort to "shrinkflation" — reducing the size of products or their quality while charging the same price, per the Economist.

  • "A 5.5% jump in the cost of a pint after years of 5% increases does not send beer drinkers searching for other pubs in the way that a 0.5% hike after years of no change might," the magazine explains. "Thus falling inflation can make prices 'stickier.' To compensate, firms instead find other ways to impose costs on buyers."

Be smart: Consumers have seen this phenomenon recently from companies like Postmates and DoorDash, who have padded revenues by hiding the true price of their service in various hidden fees or even dressed up as "tips."

  • As GrubHub CEO Matt Maloney pointed out in a recent interview with Axios' Kia Kokalitcheva, when customers order via most delivery services, they find multiple charges like a "small plate fee" or "service fee" wrapped into the overall price that can add up to much more than the advertised delivery charge.

Flashback: The Obama White House issued a report on such fees in 2016, detailing the ways companies in the automotive, banking, concert and telecom sectors, to name just a few, hide their real prices from consumers.

  • These hidden fees have become entrenched revenue generators for businesses like hotels, which reap big profits from hidden "resort fees," and airlines that charge for services previously included in the airfare, like baggage or seat assignments.

The bottom line: A major outcome of President Trump's trade war with China may be that consumers get stuck with higher prices and lower quality goods that still don't move the needle on inflation because companies aren't marking up the price of the items themselves.

Go deeper

Trump accuses Twitter of interfering in 2020 election

President Trump speaks to the press as he departs the White House in Washington, D.C., on Thursday. Photo: Mandel Ngan/Getty Images

President Trump responded via tweets Tuesday evening to Twitter fact-checking him for the first time on his earlier unsubstantiated posts claiming mail-in ballots in November's election would be fraudulent.

What he's saying: "Twitter is now interfering in the 2020 Presidential Election.They are saying my statement on Mail-In Ballots, which will lead to massive corruption and fraud, is incorrect, based on fact-checking by Fake News CNN and the Amazon Washington Post," the president tweeted. "Twitter is completely stifling FREE SPEECH, and I, as President, will not allow it to happen!"

Editor's note: This is a developing news story. Please check back for updates.

24 mins ago - Politics & Policy

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 7:30 p.m. ET: 5,559,130 — Total deaths: 348,610 — Total recoveries — 2,277,087Map.
  2. U.S.: Total confirmed cases as of 7:30 p.m. ET: 1,679,419 — Total deaths: 98,852 — Total recoveries: 384,902 — Total tested: 14,907,041Map.
  3. Federal response: DOJ investigates meatpacking industry over soaring beef pricesMike Pence's press secretary returns to work.
  4. Congress: House Republicans to sue Nancy Pelosi in effort to block proxy voting.
  5. Business: How the new workplace could leave parents behind.
  6. Tech: Twitter fact-checks Trump's tweets about mail-in voting for first timeGoogle to open offices July 6 for 10% of workers.
  7. Public health: CDC releases guidance on when you can be around others after contracting the coronavirus.
  8. What should I do? When you can be around others after contracting the coronavirus — Traveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  9. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 50 mins ago - Politics & Policy

Twitter fact-checks Trump's tweets for first time

President Trump briefs reporters in the Rose Garden on May 26. Photo: Brendan Smialowski/AFP via Getty Images

Twitter fact-checked two of President Trump's unsubstantiated tweets that mail-in ballots in the 2020 election would be fraudulent for the first time on Tuesday, directing users to "get the facts" through news stories that cover the topic.

Why it matters: Twitter and other social media platforms have faced criticism for not doing enough to combat misinformation, especially when its propagated by the president.