More tariffs questions

[Max Headroom]

DJI drones shipped from the UK may be more successful in getting past customs depending on how they are labeled

I am sure someone will be tempted to buy the cheapest drone they can find and see what happens.

 

[MS Coast]

If you were a US citizen, you'd know that shoppers here generally don't care about seeing a detailed breakdown of a product's pricing. Whether shopping in person or online, people are used to seeing just the total price.

Generally, that's been correct. But we are in an entirely different economic world now. We've been told that purchases from China will now cost nearly 2.5 time what they did last month and that everything from Mexico and China will be 25% more expensive.

If the price of something suddenly doubles, consumers will want to know why. It's a very simple, reasonable, and responsible question. Why? What are the added costs? The fact that the White House considers asking or answering those questions is a hostile act against the nation is downright horrifying.

 

[mavic3usa]

If everything were to suddenly double I think citizens would be concerned even though they probably know the reason why. However, when prices are creeping and the price rise is not uniform (meaning some places you can get a battery for x but another place it's 2x) then I personally believe the consumer will just shop for the better price. Let's be honest, we are used to inflation, we are use to coming tariffs, and no one is going to demand a breakout of prices or a justification especially when some merchants are willing to at least divulge the reasons.

Ordinarily I would continue to express my opinion that government should stay out of private enterprise but it's too late for that; we've invited government inside over private businesses and now they are here to stay. So all kinds of ridiculous comments from them should not be surprising and newsflash: there's a lot more to come so get used to it. We voted for this and we all agreed that I was wrong and instead we should give it a try so we'll find out together (that I was right). Whatever good intentions are there, government cannot help themselves and eventually the bad will follow; the really bad. And it works both ways; when the government flips over, you get the worse from the other side; pick your poison. We are going to learn a hard lesson and unfortunately for my generation and the one generation before and after me, it's going to be a painful lesson.

 

[Zbip57]

I personally believe the consumer will just shop for the better price.

That's fine, if there's an option to choose a better price.

But what if it's stuff that simply not available from a domestic source, like bananas, coffee, chocolate, or drones.

 

[MS Coast]

we are use to coming tariffs

You may be used to the idea of the Trump tariffs, but I suspect you're one of very few.

I am not at all "used to" the idea of our government suddenly imposing onerous across-the-board tariffs on our allies and adversaries alike.

And then delaying them.
And then saying deals can be made for individual countries.
And then saying that some products are exempt without defining what they are. And then saying that some other products are exempt.

 

[mavic3usa]

You may be used to the idea of the Trump tariffs, but I suspect you're one of very few.

I am not at all "used to" the idea of our government suddenly imposing onerous across-the-board tariffs on our allies and adversaries alike.

And then delaying them.
And then saying deals can be made for individual countries.
And then saying that some products are exempt without defining what they are. And then saying that some other products are exempt.

If the high tariffs arrive this summer and prices go thru the roof and you're shocked and confused, that's on you.

By now, I am "used to" the idea which is short for: I'm not bothered. Why not? Because I've always said for years "bad things are inevitable" so I'm not surprised when it happens but I understand how all this seems bizarre to some people. Lying, faking, indifference, exaggerating, cheating, gaslighting, fickle....it's all par for the course and hopefully going forward, I won't meet so much resistance.

You have two halves in this country: one half that wants this and one half that doesn't want this. There are those of us in the middle who know this is a bad thing but blame the other half too for not doing enough to stop it.

 

[msinger]

No, no, no, hold on right there. You live in Pennsylvania, right? Pennsylvania has a sales tax, doesn't it? It's even a different sales tax depending on which county within Pennsylvania.

According to Google, "The Pennsylvania sales tax rate is 6 percent. By law, a 1 percent local tax is added to purchases made in Allegheny County, and 2 percent local tax is added to purchases made in Philadelphia."

Any retail seller is already required by law to "take on the burden of calculating and reporting all that data." Whether or not they choose to display the amount of sales tax included in the total price on your receipt, they already must calculate that data and they must report [and pay] that collected tax to your government. It's you, the consumer, who pays the tax. The seller collects and passes it to the gov't.

As you rightly pointed out, this touches on your own lack of familiarity with how things work in other countries.

For most people in the US, sales tax has been a normal and clearly disclosed part of transactions for their entire lives. What you're suggesting isn’t about asking businesses to report hidden costs, it’s about expecting them to break down and display additional operational expenses. But our systems aren’t designed to support that, and retail sellers are unlikely to take on added burdens that provide no benefit to their business and aren’t legally required.

Seriously?

Indeed. While I applaud your optimism, you no doubt have some kind of strange fantasy that whatever works in Canada could also work well in the US and any other country.

A 145% increase in cost certainly will be noticed, even by Americans who, "generally don't care about seeing a detailed breakdown of a product's pricing"!

I’m not following your point. A 145% increase in cost, though that's not how tariffs actually work as I mentioned earlier, would be immediately obvious to buyers if and when it happens. No one needs a detailed breakdown of every cost component to notice that something they bought last month is now significantly more expensive.

Same here. It's not personal. I'm just fascinated by how it's even possible for Americans to see things so completely differently than Canadians, when we both have access to using the same Google searches.

What’s truly fascinating (to me at least) is that you seem to assume all Canadians share your opinions simply because you're Canadian. But that’s not how countries work. They're made up of individuals with diverse perspectives. So, when you step outside of your echo chambers, it’s not all that surprising after all.

Some people actually believe that Fox News qualifies as, "mainstream media".

Amen to that. I don't recommend you watch CNN either

With that said, CNN does have the best New Year's Eve broadcasts. Highly recommended!

 

[msinger]

If the price of something suddenly doubles, consumers will want to know why. It's a very simple, reasonable, and responsible question. Why? What are the added costs?

Just imagine the manpower it would take if retailers were legally required to provide a detailed breakdown of every cost component wherever products are sold. There are far more efficient ways to keep people informed, like sending out email newsletters. And that's certainly something a company like Amazon could easily do.

When egg prices spiked, I didn’t see retailers overhauling their systems to explain the 300% (or higher) increase. Why should retailers be forced to jump through hoops for this next unusual cost increase?

 

[Zbip57]

For most people in the US, sales tax has been a normal and clearly disclosed part of transactions for their entire lives.

I'm not even sure whether we're even talking about the same thing any more.

If, as you say, your "sales tax has been a normal and clearly disclosed part of transactions", why should it not be similarly disclosed when that sales tax suddenly jumps by 145%?

The US import tariff on Chinese products, like DJI drones, is 145. The cost of DJI drones is going to increase by 145%. Somebody must pay that increased cost.

If it's you importing it directly by FedEx, then it's YOU who pays that extra 145%. If it's Amazon importing the drone, then Amazon pays the 145% import tariff. If Amazon then lists that drone for sale on the Amazon website, it's going to list it as 145% more expensive than before such tariffs were applied.

Amazon proposed to break out the pricing to show exactly how much of the price increase is directly due to those tariffs. It effectively is a new government-imposed "sales tax" applied on imported products and Amazon proposed to show that new tax "clearly disclosed as part of the transaction".

Note that Amazon would have already paid the import tax, they are now recovering that additional cost by showing the exact amount by which the price was increased due to the tariff.

A 145% increase in cost, though that's not how tariffs actually work as I mentioned earlier, would be immediately obvious to buyers if and when it happens. No one needs a detailed breakdown of every cost component to notice that something they bought last month is now significantly more expensive.

Going back to the previous example of a $3000 Mavic instead suddenly costing $7350, people will certainly notice that increase.

If that price increase had been caused by your normal sales tax suddenly jumping by 145%, you don't think people would deserve an explanation for that?

If Amazon sold a Mavic for $3000 last month, but now suddenly show the same Mavic costing $7350, you don't think anyone "needs a detailed breakdown" explaining why the price has increased??

That same Mavic is still valued the exact same $3000, but the 145% price increase added $4350 as a sales tax imposed by your government. Amazon deserves the right to explain where that money is going. It's not going to Amazon. It's going to the US treasury, or it's being recouped by Amazon after they already paid that amount of tax to the US treasury.

It is downright horrifying that the White House would continue to fraudulently claim the tariff is paid by China, and that it's somehow a "hostile and political act" to dispute that nonsense.

[...] that's not how tariffs actually work as I mentioned earlier [...]

That's exactly how tariffs work!

They work that way regardless of which country applies them. An import tariff is a tax on imported products. The importer pays that tax, then passes the increased cost down the line to the final consumer. Nobody can afford to "absorb" a 145% price increase without passing it on down the line.

 

[msinger]

I'm not even sure whether we're even talking about the same thing any more.

I believe the issue may be that you're offering guidance on a topic that you may not fully understand.

Going back to the previous example of a $3000 Mavic instead suddenly costing $7350, people will certainly notice that increase.

Here's that example again. This is exactly what I meant when I said this isn't how tariffs work. If a Mavic currently costs a consumer $3,000, a 145% tariff wouldn't raise the price to $7,350. If that was the case, DJI (or the seller) would have to be selling them for $0 profit.

Amazon proposed to break out the pricing to show exactly how much of the price increase is directly due to those tariffs. It effectively is a new government-imposed "sales tax" applied on imported products and Amazon proposed to show that new tax "clearly disclosed as part of the transaction".

But this isn't the same as a US sales tax. If the sales tax were adjusted, most systems could already handle that. That's assuming companies aren't hardcoding tax rates into their software.

Amazon would need to upgrade their systems to capture and display this new tariff cost. Every seller on Amazon would also have to start tracking and reporting that additional cost for each product they list. That's assuming the goal is to have this new cost listed separately on all products.

It's a nice idea in theory if the goal is to keep customers informed, but the logistics make it seem pretty unrealistic. And in the end, most US consumers likely wouldn't even notice or benefit from all the extra effort. Few people will likely decide against buying a product simply because the tariff "tax" is too high. Purchase decisions are typically based on the total cost of the purchase.

The importer pays that tax, then passes the increased cost down the line to the final consumer. Nobody can afford to "absorb" a 145% price increase without passing it on down the line.

And now you're back to oversimplifying very complex issues. While costs do need to be covered somewhere, I don't think it's accurate to assume all importers will pass on all tariff costs.

Did you watch the video I posted above? That importer plans to absorb 100% of his tariff costs.

 

[mavic3usa]

[Everything]

I believe the issue may be that you're offering guidance on a topic that you may not fully understand.

This.

Zbip, you are missing some key points because you are conflating some of the well-known economic principles and misusing some of the terms including the "cost." Consumer don't pay for the cost of a product at the counter and the end consumer who buys goods at retail OTC may pay a sales tax at the POS (which goes directly to the government and not in the merchants pockets) but never pay a tariff to the government. It's super complex and quite convuluted and there is no way to accurately represent the real effect of a tariff on a sales receipt; it's not a simple math equation.

I believe Amazon should be able to do whatever they wish without government interference; however, I do believe if they try to publish such details, it may cause even more confusion. Not saying I agree with the government officials who are already confusing everyone but adding more confusion on top of it doesn't make it right. That guy is speaking to his people, not to you and me. If you don't speak his language, it's sounds nuts but I can assure you, a lot of people are listening; probably more than in your entire country.

As mentioned, you haven't been watching the videos; that's obvious. You don't have to believe parts of these different video but what some people are saying, especially where they are the importers or directly involved, it could be helpful to hear it and at least try to understand it.

Here's another "winning" story:

Wyze gets $255K tariff bill for $167K worth of floodlights

That’s a 152.5% tax rate.

www.tomshardware.com

 

[Zbip57]

If a Mavic currently costs a consumer $3,000, a 145% tariff wouldn't raise the price to $7,350. If that was the case, DJI (or the seller) would have to be selling them for $0 profit.

In your own words, please explain, WHO do YOU think pays the 145% tariff?

Did you watch the video I posted above? That importer plans to absorb 100% of his tariff costs.

Of course I watched the video. I watched it again a second time just now to see if I could figure out what you're trying to say. He very clearly says that it is HE himself, the importer, who has to pay the tariff.

He explains why he paid only a 45% tariff, as the full 145% hasn't affected him yet. I didn't know that the most recent tariff doesn't apply to cargo already on route, which is why he escaped by paying only the 45% in effect when his shipment left China.

He also describes several ways it might be possible to escape paying the tariff, by storing the shipment [at great cost] until such time as someone comes to their senses and removes these bonkers tariffs. He even considered refusing acceptance of the shipment altogether and sending it right back to China.

But, at 3:30 in the video, he says none of those options made sense, so, "I have decided to pay the 45% tariff and just eat it."

You interpret that to mean that he decided to not pass that cost on to his customers. I'm not so sure that's what he meant.

Let's go back to your initial quote:

If that was the case, DJI (or the seller) would have to be selling them for $0 profit.

It all depends on how much profit margin exists before the tariff is applied.

How much profit do you think your video guy is making on each bottle of his Oliveum Hot Sauce? I checked on Amazon each bottle sells for US$39.99.

The hot sauce itself is made in America, but the bottle and packaging is all made in China and therefor subject to tariff, which was "only" 45% at the time his video was made, but will be 145% for any further shipments.

I'm just making up some example numbers here. Let's say the final product actually costs him $35 to produce, and he sells it for $40. So his profit is $5/bottle. Let's say the bottle and packaging from China only costs him $5.

He had to pay an extra 45% tariff on each empty bottle imported from China, and chose to "eat it".
$5 x 45% = $2.25

So, instead of a $5 profit on each bottle he sells, now he's only earning $5 - 2.25 = $2.75 profit. Or, he could choose to continue earning the same $5 profit by passing the tariff cost on to his customers and selling the hot sauce at $42.25/bottle.

What happens when the tariff rate hits the full 145%?
China still ships him his bottles for the same $5 apiece. But now he has to pay 145% import tariff on top of that.

$5 x 145% = $7.25 tax

Instead of earning a $5 profit on each bottle of hot sauce, now he's actually losing money.
$5 - 7.25 = -$2.55

If he chooses to "eat" that 145% tariff, he's going $2.55 into the hole on every bottle of hot sauce he sells if he continues to sell them for $40. Of course he's going to pass the cost of that tariff on to his customers. Instead of selling hot sauce at $40/bottle, he will need to raise the price to $47.25 if he wants to continue making the same $5 profit as before.

He's never going to give the sauce away for free. And he's certainly NEVER going to sell the sauce at less price than it cost him to produce. No business can survive like that.

If a Mavic currently costs a consumer $3,000, a 145% tariff wouldn't raise the price to $7,350. If that was the case, DJI (or the seller) would have to be selling them for $0 profit.

Back to DJI. Of course it "costs" less than $3000 for DJI to produce a Mavic. They make a good profit on everything they sell. But, for the purpose of this example, let's say it costs DJI nothing at all to produce Mavics. They just fabricate them for free out of fairy dust and then sell them to Americans for $3000. That's a straight $3000 profit margin on every Mavic sold.

Now, in order to sell those Chinese drones in America, "somebody" first has to pay the 145% tariff tax.
$3000 x 145% = $4350

The importer has to pay $4350 to the US gov't in order to be allowed to sell a Mavic for $3000. That's much worse than a $0 profit. That's actually a $1350 loss on every Mavic sold, without taking into account what it really costs to manufacture one in the first place!

Nobody is ever going to do that! Of course the price of that added tariff tax is going to be passed straight on to the final consumer. No business is ever just going to "eat" a 145% tariff.

Now YOU explain, how YOU believe tariffs work differently than that...

And, while you're at it, go back and watch his previous video, where the hot sauce guy explains who pays the tariff.

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