A key question as Donald Trump squeezes into his “Tariff Man” leotard in the service of rebalancing global trade asks if US consumers are willing and able to foot the bill for the restoration of American “greatness.”

Even Trump conceded last week that “We may have some pain” in the short-term, where “we” is a category that doesn’t include billionaires like himself. Rather, “we” means everyday people who, depending on how this all develops, will pay higher prices as a result of steep import duties should they be enacted and sustained.

The US consumer proved remarkably resilient in recent years, at least in aggregate. Recall that the personal spending component in the Q4 GDP release was quite robust. It goes without saying that not everyone’s coping: America’s a hopelessly bifurcated society. Politically, yes, but economically too. Tens upon tens of millions are tapped out completely, while others continue to enjoy a bonanza from rising stock prices, record-high home values and billions in monthly interest income from money market funds.

One concern is that at the lower-end of the income spectrum, there simply isn’t a lot of room in monthly budgets, if there’s any at all, for additional price increases on top of those seen post-pandemic when headline US inflation nearly made it into the double-digits. As Goldman’s David Kostin put it, households “absorb[ed] higher prices during the 2021 inflation spike, [but] it’s unclear how willing consumers will be to accept higher prices this time around.”

This discussion’s replete with overlapping irony. The figure below, from SocGen’s Albert Edwards, reminds you that labor’s share of the pie declined dramatically in the US after China’s WTO accession. (If you need the backstory on China’s WTO entry, you can peruse it at your leisure in “Devil’s Bargains.”)

Of course, Americans also enjoyed a marked decline in prices for many consumer goods over the three decades leading into the pandemic. That’s the Faustian deal: Your industrial base, your pride and your good-paying jobs in exchange for what’ll feel like miraculously cheap products.

Eventually, the US decided that wasn’t a good deal after all, and a thoroughly irritated electorate turned to a populist demagogue to “fix” the problem, as irritable electorates are wont to do. According to Mr. Fix It, the solution’s tariffs which, by definition, will reverse the trend towards cheaper products, thereby turning the financial screws on the very same downtrodden Americans whose economic lives were traded for cheaper products in the first place.

Corporate America could mitigate the situation by — gasp! — absorbing the cost of the tariffs themselves instead of passing it along to consumers, and God knows the C-Suite can afford it. Have a look:

There’s “that” chart again: The “Greedflation” chart, which shows that corporates are (still) enjoying an unprecedented windfall, despite higher wage costs and higher input prices.

“Never in history have corporate margins risen when faced with sharply rising unit costs — until now,” Edwards wrote.

Taken together, the two charts illustrate what Albert called the “macro origins of populism.” “Corporates have accrued too much of the national income pie and the backlash is shaping populist policies,” he wrote.

The issue for Trump is that making good on his promises to the base means helping workers regain lost ground, but management teams already facing the prospect of tariff-related margin compression may be loath to sustain hefty pay gains for their employees — at a time when tariff-related inflation may start chipping away at paychecks.

That, in turn, could mean reduced pricing power (as consumers balk at additional price hikes), volume declines or both. And the last thing you want when valuations are this stretched is slower profit and sales growth.

This is a very difficult circle for Trump to square. He views stock prices as a real-time barometer of presidential performance, so putting corporates in a position where their margins shrink — even from record levels — is risky business. Even riskier is a scenario where tariffs push inflation back up, casting doubt on Trump’s claims that his trade policies won’t lead to rekindled price pressures. “This is probably the most sensitive moment we’ve had for an escalation in inflation since the policy errors of 2021,” Larry Summers told Bloomberg Tuesday.

But Trump really doesn’t have much choice: He’s “Tariff Man,” after all, and he’s spent the better part of the last decade insisting that protectionism of various sorts can fix all, or at least most, of America’s problems. JonesTrading’s Mike O’Rourke captured it well last week. “Globalization can only be partially dialed back,” he wrote. “And it needs to occur over time.”