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- Mark Cuban said tariff uncertainty is forcing firms to stockpile and freeze prices.
- Inflation cooled as businesses are delaying price hikes amid trade policy confusion.
- Treasury Sec. Scott Bessent said there's no price hikes yet, but firms are adapting differently.
Mark Cuban says there's a simple explanation for why inflation hasn't risen as much as economists predicted in recent months — and it all comes down to President Donald Trump's tariffs and the trade uncertainty they've triggered.
In an X post on Sunday, the billionaire entrepreneur said businesses are playing a high-stakes guessing game with tariffs, which is stopping them from raising prices.
"They borrow money or use their available cash to front-run the tariffs and buy as much inventory as they can. 3, 6 months or longer," Cuban wrote.
This kind of stockpiling is intended to lock in better prices ahead of potential tariff hikes — but it comes at a cost, Cuban said: using cash that could earn interest or taking on loans with high rates, sometimes between 10% and 20%.
Cuban argued that this preemptive buying isn't a growth move but rather risk management. Companies are sacrificing financial flexibility just to stay ahead of unpredictable trade policy.
And because they don't know whether tariffs will rise, stay in place, or be rolled back, they're reluctant to pass on costs to consumers.
"In fact, they may even discount some as a way to clear out inventory and replenish cash or pay down expensive loans," Cuban said.
This strategy, he said, isn't limited to startups or small businesses.
"This is all companies facing this," Cuban added, noting that even Walmart has said price increases are more likely in the future, reflecting the wait-and-see posture of many major firms.
As a result, prices stay flatter than expected, even as other costs rise.
The Federal Reserve's favorite inflation measure, the personal consumption expenditures index, cooled in April, rising just 0.2%, down from a 0.7% jump in March. This brought the annual inflation rate to 2.1% in April — the lowest since March 2021 and below consensus estimates of 2.2%.
Treasury Secretary Scott Bessent echoed parts of Cuban's analysis in his Sunday appearance on CBS' "Face the Nation," but framed it more optimistically.
"Thus far, there have been no price increases," Bessent said. "Everything has been alarmist. The inflation numbers are actually dropping."
He pointed to falling gas and food prices and noted that consumer earnings rose 0.8% last month, calling the trend "pro-consumer."
Still, he acknowledged uneven outcomes among major brands.
"Different companies are doing different things; they're making decisions based on their customers, what they think they're able to pass along to their customers, what they want to do to keep their customers," he said, citing Amazon and Home Depot as examples of firms holding prices steady.
Cuban, however, remained skeptical of any stability.
"The variance in tariffs has made it impossible to know how to manage costs," he wrote.
That unpredictability, not just raw input costs, is what's preventing companies from planning, investing, and ultimately, raising prices with confidence, he added.