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The Tariff Talk
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Boghie
Well-known member
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!!!
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
Well-known member
49% increase in 4 years sounds more like gouging than inflation.
FAAM
Active member
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
Well-known member
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%.
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.
Friday was a good day. Now with this new information Monday should be a good day.
The Washington Post
Cracks in the armor?
The Washington PostPhones, other electronics exempt from new tariffs, Trump administration says
Cracks in the armor?
James48843
Well-known member
So- now the Chinese have cut of critical components used by the US Military. They have cut off rare earth magnets, and rare earth raw materials.
Are we great yet?
Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while the Chinese government drafts a new regulatory system. Once in place, the new system could permanently prevent supplies from reaching certain companies, including American military contractors.
The official crackdown is part of China’s retaliation for President Trump’s sharp increase in tariffs that started on April 2.
...
https://www.nytimes.com/2025/04/13/business/china-rare-earths-exports.html
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Are we great yet?
BREAKING NEWS**** China Halts Critical Exports as Trade War Intensifies
China has suspended exports of a wide range of critical minerals and magnets, threatening to choke off supplies of components central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.Shipments of the magnets, essential for assembling everything from cars and drones to robots and missiles, have been halted at many Chinese ports while the Chinese government drafts a new regulatory system. Once in place, the new system could permanently prevent supplies from reaching certain companies, including American military contractors.
The official crackdown is part of China’s retaliation for President Trump’s sharp increase in tariffs that started on April 2.
...
https://www.nytimes.com/2025/04/13/business/china-rare-earths-exports.html
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weatherweenie
Well-known member
China is also cutting off US beef imports. They are now getting their beef from Australia.
FAAM
Active member
Yup. That's likely in addition to likely big cut to US soybean exports to China per a couple of NPR reports (today & a few days ago); our farmers are on the brink of not able to stay above water, during dt's 1st term tariff stuff - we permanently lost large chunk of market share for that crop to other competitors - namely Brazil. I guess that's watcha call darn-good plan and negotiating, huh? I hope that is not considered political - as I believe we call them the facts.
James48843
Well-known member
So I’m starting to see some hard data, and it tells me that I may be way UNDERestimating the impact of tariffs on the overall economy by orders of magnitude- much so that I think we need to start talking about where safe havens will be.
Data now says more than 80 ships have cancelled sailings from China to the U.S. in the past two weeks. That’s at least 640,000 containers worth already suspended- below “normal”. A cut of 69%.
The economy will contract somewhere around 6-10% next month or two if that’s correct. While a lot of companies tried to front load inventory- that’s now over- and will only last a limited time.
I’m thinking by July the market will really start to show the adversity.
Data now says more than 80 ships have cancelled sailings from China to the U.S. in the past two weeks. That’s at least 640,000 containers worth already suspended- below “normal”. A cut of 69%.
The economy will contract somewhere around 6-10% next month or two if that’s correct. While a lot of companies tried to front load inventory- that’s now over- and will only last a limited time.
I’m thinking by July the market will really start to show the adversity.
Attachments
James48843
Well-known member
DHL suspends foreign shipments to the USA over $800.
DHL, the international courier firm, will temporarily pause shipments to the U.S. for items with a declared value of more than $800, the company announced in a notice.
The announcement said that, starting Monday, the company will stop collecting and shipping orders from businesses abroad to private individual customers in the U.S. if the declared custom value exceeds $800.
More:
DHL, the international courier firm, will temporarily pause shipments to the U.S. for items with a declared value of more than $800, the company announced in a notice.
The announcement said that, starting Monday, the company will stop collecting and shipping orders from businesses abroad to private individual customers in the U.S. if the declared custom value exceeds $800.
More:
Courier firm DHL to suspend global shipments of more than $800 to US due to new customs rules
DHL, the international courier firm, will temporarily pause shipments to the U.S. for items with a declared value of more than $800, the company announced in a notice. The announcement said that, s…
thehill.com
James48843
Well-known member
Wharton School of Econmics now says GDP will fall 6% based on current tariffs.
Summary: Many trade models fail to capture the full harm of tariffs. PWBM projects Trump’s tariffs (April 8, 2025) will reduce long-run GDP by about 6% and wages by 5%. A middle-income household faces a $22K lifetime loss. These losses are twice as large as a revenue-equivalent corporate tax increase from 21% to 36%, an otherwise highly distorting tax.
Source: https://budgetmodel.wharton.upenn.edu/issues/2025/4/10/economic-effects-of-president-trumps-tariffs
(A very good analysis of affects of tariffs by the Wharton School. Worth a read .)
Summary: Many trade models fail to capture the full harm of tariffs. PWBM projects Trump’s tariffs (April 8, 2025) will reduce long-run GDP by about 6% and wages by 5%. A middle-income household faces a $22K lifetime loss. These losses are twice as large as a revenue-equivalent corporate tax increase from 21% to 36%, an otherwise highly distorting tax.
Source: https://budgetmodel.wharton.upenn.edu/issues/2025/4/10/economic-effects-of-president-trumps-tariffs
(A very good analysis of affects of tariffs by the Wharton School. Worth a read .)
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