The Tariff Talk

[weatherweenie]

 

[Boghie]

Tariffs, tariffs, tariffs...

What follows is a true tale of tariffs on a product I have to routinely purchase. My last purchase in March cost me $278. In November of 2020 it cost me $186 for the same product. The product is imported from France. My reseller is obviously 'Merican.

On Monday I got the dreaded email from the company informing me that their prices had to rise because of the tariffs. The tariffs on EU products are 20%. So, I wheeled home, sweated profusely, broke out a bottle of vodka, and settled down to see the new price.

It was $293.
A 5% increase.

Remember, the tariff does not include the costs incurred after import Additionally, some of those costs (fuel, the potential for higher corporate and personal income taxes, etc.) have gone down.

So, four years of inflation cost me 49% and the tariff cost me 5%.

This has also put a bug in my ear. If $15 is 20% of the imported value then the price at import is $75 - eh. Me thinks I might be able to find a new reseller. That is a lot of additional cost for very little value as far as I can tell. The Hidden Hand is now at work!!!

 

[weatherweenie]

So, four years of inflation cost me 49% and the tariff cost me 5%.

49% increase in 4 years sounds more like gouging than inflation.

 

[FAAM]

Tariffs, tariffs, tariffs...
''' It was $293.
A 5% increase. ...
So, four years of inflation cost me 49% and the tariff cost me 5%.

This has also put a bug in my ear. If $15 is 20% of the imported value then the price at import is $75 - eh. Me thinks I might be able to find a new reseller. That is a lot of additional cost for very little value as far as I can tell. The Hidden Hand is now at work!!!

Hmmm, is is not also possible that the $15 is actually less than, say 5%, of the 20% import-tariff & the retailer and/or the exporter/manufacturer took a 10%+ hit on the whole deal to keep & not shock the customers too much?

 

[Boghie]

49% increase in 4 years sounds more like gouging than inflation.

Yes, it is medical supplies though. My other medical supplies are more inconsistent, but they are costing far more now than they did in 2020 - just harder to quantify without putting work into it. During inflationary periods some categories experience higher inflation than others. Some experience lower inflation or even deflation. The overall average inflation adjustment for 2021 through 2024 is a around 20%.

Hmmm, is is not also possible that the $15 is actually less than, say 5%, of the 20% import-tariff & the retailer and/or the exporter/manufacturer took a 10%+ hit on the whole deal to keep & not shock the customers too much?

Yes, but it was a very sad email. For a business, raising the price at all gets people looking for other sources. So they may eat some of it, but so will the reduction in transportation and other costs. It is Adam Smith's Hidden Hand at work. However, OCCAM'S razor leads me to bet that the biggest factor is that the initial import cost is FAR less than my pre-tariff $278 cost. If the cost at the import point is $100, the implication is that the transportation, storage, marketing, profits, and pre-tariff taxation and regulation cost that is incurred inside 'Merica is $178. Hit the product with a 20% tariff on $100 and the end product now costs $298. Save $5 in transportation, other costs, and a little profit slash and you are at $293.

A 20% tariff is not a 20% price increase to you. It is far more complicated.

 

[nasa1974]

Friday was a good day. Now with this new information Monday should be a good day.

The Washington Post

Phones, other electronics exempt from new tariffs, Trump administration says​

MSN

Cracks in the armor?