Billionaire entrepreneur Mark Cuban took to X to lay out his reasoning for why inflation hasn’t spiked, despite economists’ warnings.
“It’s really simple,” Cuban said, offering a firsthand look at how businesses are responding to ongoing tariff uncertainty.
In a detailed thread, Cuban explained that companies are loading up on inventory before tariffs hit, hoping to lock in cheaper prices.
“They borrow money or use their available cash to front-run the tariffs and buy as much inventory as they can,” he wrote.
That includes placing large orders 3 to 6 months in advance, sometimes longer, often at a discount from manufacturers, also trying to hedge risk.
But that strategy comes at a cost. Cuban noted that companies either give up the interest they could be earning on cash (around 4%) or take on debt with interest rates as high as 10% to 20%.
“None of the above is a positive,” he said. “Not having cash or add[ing] to their liabilities is a risk.”
Because of that financial strain, many companies hesitate to raise prices.
“They may even discount some [products] as a way to clear out inventory and replenish cash or pay down expensive loans,” Cuban wrote.
“This isn’t just small companies. This is all companies facing this.”
He added that companies are also dealing with the unpredictability of tariff policies.
“They see the on-and-off-again tariffs in action, so they don’t know how long their inventory will have the value they expected.”
Cuban summed up his argument: “This is why prices haven’t gone up to this point.”
Tariffs as Economic Disruptors
In a follow-up comment, Cuban said, “Sometimes the impact of tariffs isn’t obvious. So much right now is based on timing and uncertainty. It’s really hard for small business.”
When asked why large companies like Apple can’t simply absorb tariff costs, Cuban responded: “They have a responsibility to their shareholders to maximize their earnings. That amount less is being paid to the government in tariffs. That’s the same as a new tax.”
Cuban noted that even if tariffs seem manageable on paper, they still hurt companies by tying up their money and making planning harder.
Businesses are buying up extra inventory before tariffs hit, often using their own cash or taking out loans with high interest rates.
Real-World Impacts and Pushback
X users from various industries chimed in. One coffee supplier said they stocked up on inventory in late 2024 but were unsure whether they would need to raise prices later.
Another reported getting urgent early-payment requests from vendors hit with tariff bills of over $500,000.
Critics pushed back on Cuban’s argument. Some claimed inflation is down because the economy is slowing, not because of pricing restraint.
“Inflation didn’t fall because companies feared raising prices. Inflation fell because the credit engine seized,” one person said.
Cuban responded: “If the credit engine freezes, wouldn’t it be impossible for companies to borrow or become insanely expensive, meaning they wouldn’t be able to invest in front-running tariffs? Or much of anything, choosing to retain cash?”
When someone sarcastically asked if he would blame student loans next, Cuban replied, “If the economy slows enough and enough people lose their jobs, and companies have to lower prices, you may be right.”
Not everyone was critical. Some users agreed with Cuban’s points, with one writing, “Tariffs are a loaded gun pointed at the economy,” and another calling his breakdown “accurate.”
Cuban concluded that businesses are doing what they can to stay afloat in a climate of high rates and shifting policy: “The variance in tariffs has made it impossible to know how to manage costs, so you do all you can to clear out inventory and get back to cash. And take your chances on tariffs not being as big as you feared.”
In short, inflation hasn’t spiked not because the pressure isn’t there, but because businesses are absorbing the blows quietly, for now.
IMAGE CREDIT: “Mark Cuban” by Gage Skidmore, via Flickr. Licensed under CC BY-SA 2.0. Image adjusted for layout.