More tariffs questions

[Zbip57]

So the price for the Osmo Pocket 3 increased from $519 to $799 (a $280 increase).
How is DJI covering the cost of that tariff if they are only charging US consumers $799? And if that $799 cost does not include the tariff cost, then why is DJI increasing the price by $280?

Maybe, as per the Oliveum Hot Sauce video you posted earlier, this is old stock from when a lower tariff applied. 280/519 = 54%

Also, as mentioned in that same video you posted, nobody knows anymore from one day to the next what level of tariffs actually apply to which products.

For example, a "permanent and non-negotiable" 25% tariff was imposed on everything imported from Canada because Canadians were supposedly causing a national emergency in your country by flooding you with illegal migrants and fentanyl. "Somebody" keeps saying how great these tariffs are, the best ever, since you don't need any of our lumber, oil, electricity, or cars anyway.

But on Tuesday, that same "somebody" signed yet another executive order to backtrack [again] on his permanent and non-negiotable rhetoric after it was explained to him how inextricably tangled our auto industries are, with parts and components crossing back and forth over our borders as much as eight times before reaching final assembly into cars produced in Mexico, Canada, and the USA.

So, taking effect tomorrow, car parts and components will be exempt from those previously "permanent and non-negotiable" 25% tariffs, as long as they continue to comply with the terms of the USMCA trade agreement, the same USMCA that "somebody" negotiated and signed in his first term declaring it to be the best deal ever for America, the same deal that he then tore up in his second term declaring only a fool could have signed such a stupid deal, and still exactly the same deal that is now still okay just for car parts and components. Who can keep up with this stuff?

When consumers purchase drones from dji.com, shipments sometimes come from warehouses in the US, and other times directly from DJI in China.

It's important to distinguish between DJI head company in China versus DJI-North-America's offices and warehouses within the USA.

Let's call one DJI-China and the other DJI-America.

If you import directly from DJI-China, then you, the importer, are responsible for paying the tariff.

If DJI-America imports directly from DJI-China, then DJI-America is the importer and has to pay the tariff. Does the parent company in China compensate DJI-America for that tariff expense?

If you purchase from DJI-America, what portion of the applicable tariff is passed on to you? It depends on how much old stock, pre-145%, is still available in the American warehouses.

Nobody is going to continue selling a product for less than it costs to bring to market within the USA. DJI-China will either entirely stop shipping to the USA, or their consumer prices will have to increase to cover the tariff expense.

We're talking drone market here. The current US regime has been trying to get rid of DJI in any case. No tears will be shed if DJI is forced out of the market. There will be loud screaming from the relatively small American consumer group who buys DJI drones if the price increases to reflect the full 145% tariff. But who cares about that?

A better example of how these tariffs would affect American consumers would be cellphones and other Chinese-produced electronic equipment. That's a MUCH bigger market segment than just drones! The potential negative market reaction to a 145% tariff-driven price increase on Apple and Android cellphones caused your administration to quietly announce yet another backpeddling on their "permanent and non-negotiable" tariffs when they issued an exemption for cellphones and electronic devices (but not drones).

I'm guessing that means Apple and Google Android were not even considering to "eat" the 145% tariff themselves!

When current stock eventually runs out and all new Chinese imports become subject to the 145% import tariff, it'll be very interesting to see how American consumers react, or whether the tariffs are withdrawn before things get really bad.

 

[msinger]

Maybe, as per the Oliveum Hot Sauce video you posted earlier, this is old stock from when a lower tariff applied. 280/519 = 54%

Doubtful. It's currently out of stock for the US.

DJI typically ships within three business days to my location, even when the shipment comes directly from China. So no, I don't think this is like the shipments that take two to three months by boat to reach the US.

Also, what happened to your theory that the $799 listed on the DJI store was the "cost of goods" the tariff would be applied to? That doesn't seem to follow your new "280/519 = 54%" math.

When current stock eventually runs out and all new Chinese imports become subject to the 145% import tariff, it'll be very interesting to see how American consumers react, or whether the tariffs are withdrawn before things get really bad.

And let's not forget about China. It sounds like things are getting tougher over there, with fewer buyers for their products. I'm sure they'll be ready to make a deal with the US before long.

 

[Zbip57]

This is hopeless.

what happened to your theory that the $799 listed on the DJI store was the "cost of goods" the tariff would be applied to? That doesn't seem to follow your new "280/519 = 54%" math.

You said the displayed price increased from $519 to $799. That's a 54% increase.

The mystery would be solved if, as suggested by Amazon, companies would clearly display the reason for the price increase.

*IF*, for example, the unit price "cost of goods" was $519, and they were forced to add the cost of a %54 import tariff ($280), that would bring the total cost to the consumer up to a new $799.

That is the math that I suggested as a possible explanation for the price increase.

You've misinterpreted what I wrote, suggesting that another 145% should then be applied on top of that already inflated $799. But that's not at all what I wrote.

If the full 145% tariff were applied [obviously it wasn't], it would be calculated on the original value "cost of goods" [whatever that was before any previous tariffs were applied.] Otherwise you're calculating percentage of taxes on top of previous taxes on top of previous taxes etc.

You can go right ahead and keep on believing the fairy tale that American importers [or even Chinese exporters] are happy to "eat" that 145% import tariff, ready to "absorb" that hit all on their own rather than passing it on to their consumers. But, unless it's soon removed, that 145% increase will certainly produce noticeable consequences for the American economy.

And let's not forget about China. It sounds like things are getting tougher over there, with fewer buyers for their products. I'm sure they'll be ready to make a deal with the US before long.

As I've said all along. Tariffs and counter-tariffs hurt everyone, China included. But China will survive without American pork and soybeans, while Americans will quickly tire of the inflationary consequences resulting from the higher prices required to buy the Chinese products your country has come to rely on.

Instead of offending the entire world with completely unnecessary and disruptive tariffs, it would have been MUCH smarter of your regime to start immediately into constructive trade negotiations with your largest trading partners.

 

[msinger]

You can go right ahead and keep on believing the fairy tale that American importers [or even Chinese exporters] are happy to "eat" that 145% import tariff, ready to "absorb" that hit all on their own rather than passing it on to their consumers

You have a real talent for steering the conversation in a different direction whenever I ask a direct question. It's all rather exhausting.

So let's get back to the question, which I'm sure you recall is about this claim:

If you order a $3000 Mavic from DJI.com in China, with it shipped directly to your home, that makes DJI the Chinese exporter and it makes you the importer. You are responsible for paying the tariff. Customs will hold the package until you pay the 145% tariff. Or, if it's being delivered via FedEx/UPS/DHL, they will pay the tariff on your behalf, then hold the package until you refund them that expense plus whatever additional brokerage fee they charge for handling that process on your behalf. You end up paying the 145% ($4350) tariff fee.

Not only did you claim that tariffs are based on the retail price consumers see in the DJI store, but you also argued that DJI isn't responsible for paying the tariff. And then what you really learned today is DJI is 100% responsible for paying the tariff.

Nobody in the US (importer or consumer) is paying a $4,350 tariff on a product that has a retail price of $3,000. You're misinformed, and at this point, it's probably best to stop repeating that claim.

How DJI (or any other business) chooses to handle that cost as part of doing business is entirely up to them. I'm not sure why you have this idea that importers, American or otherwise, are always happy and willing to absorb 100% of that business expense. While some businesses will no doubt take that route (as I've shown above), it's certainly not an expense every business can or is willing to absorb.

 

[Meta4]

And let's not forget about China. It sounds like things are getting tougher over there, with fewer buyers for their products.

There are plenty of countries not engaging in a ridiculous trade war with China and still buying Chinese products.
USA only accounts for approx 15% of China's total exports.

 

[Bad Santa]

There's so much we get from China that we can't get from anywhere else and we won't be able to start making it for a decade. China can make stuff BECAUSE they serve the world without issues. Their market is, as noted above 8x what the market the US has.
Electronics is the #1 place we can't compete on a world stage and DJI stuff (or drones in general) are mostly electronics.
When the farmers have no market this summer and fall, things are going to get ugly.
We may not be able to afford to buy a drone but we might be able to get beef and other, normally exported, produce for pennies on the dollar (or the farmers might just plow it all under like they did in the pandemic)

I, for one, can't afford to buy US made stuff that I normally buy from China. And that's not going to change. For me, I'll just start saving my money.

Making people pay more for stuff, just to be able to take that extra money, just seems wrong somehow. Seems like a sales tax.

 

[tstr14]

There's so much we get from China that we can't get from anywhere else and we won't be able to start making it for a decade. China can make stuff BECAUSE they serve the world without issues. Their market is, as noted above 8x what the market the US has.
Electronics is the #1 place we can't compete on a world stage and DJI stuff (or drones in general) are mostly electronics.
When the farmers have no market this summer and fall, things are going to get ugly.
We may not be able to afford to buy a drone but we might be able to get beef and other, normally exported, produce for pennies on the dollar (or the farmers might just plow it all under like they did in the pandemic)

I, for one, can't afford to buy US made stuff that I normally buy from China. And that's not going to change. For me, I'll just start saving my money.

Making people pay more for stuff, just to be able to take that extra money, just seems wrong somehow. Seems like a sales tax.

I think you are way too pessimistic. Apple already has plans to introduce the iPhone 14 this fall, made entirely in the US:

 

[WanderLost]

that doesn't bode well for people like me hoping to get a shipment of my replaced drone from china...

In Canada here, we often sent goods purchased in the US back for repair/replacement. We had to use the proper forms to show that we had already paid duty when it first entered the country so we wouldn't be dinged twice for the same item. It might be a good idea to contact a broker to see if the same conditions apply since on the customs forms for replacement drones I sent and were replaced by DJI, there was a notation that they were repaired under warranty for no cost.

Although in this new age, there's no telling what will shake out in reality.

 

[Zbip57]

You have a real talent for steering the conversation in a different direction whenever I ask a direct question. It's all rather exhausting.

That's hilarious. I was about to say exactly the same thing about you!

Nobody in the US (importer or consumer) is paying a $4,350 tariff on a product that has a retail price of $3,000. You're misinformed, and at this point, it's probably best to stop repeating that claim.

Here's a reminder for you, those numbers were presented as a hypothetical example in the very first post in this thread started by @akdrone. As you have repeatedly pointed out, I'm just a stupid foreigner Canadian and can't possibly be expected to know anything about the complexities of how much your American businesses enjoy "absorbing" your outrageous import tariff surcharge taxes. I repeated those same numbers in my posts merely for the sake of consistency. If that disturbs you so greatly, please feel free to tell us the exact price upon which the tariffs are calculated.
Disclaimer: Use your own numbers. Your mileage may vary. Void where prohibited. Don't run with scissors. Look both ways before crossing the street. Always listen to your mother. And always wear clean underwear...

Not only did you claim that tariffs are based on the retail price consumers see in the DJI store, [...]

Do you even read anything I wrote? In my previous post I explained the displayed retail price may already include the applicable tariff.

[...] but you also argued that DJI isn't responsible for paying the tariff. And then what you really learned today is DJI is 100% responsible for paying the tariff.

I also wrote [which also you apparently didn't read or understand], that the importer, DJI-America, is 100% "responsible for paying the tariff", not DJI-China.

You keep referring to "DJI" as though DJI-China and DJI-North-America are the same thing. They're not.

1. If you import anything directly from DJI-China, then you are the importer and you have to pay the tariff.
2. If DJI-America imports anything directly from DJI-China, then DJI-America is the importer who pays the tariff.

Is that clear enough for you?

The only remaining question is how much of that tariff cost is then passed along to the final consumer?

You seem to be of the opinion that;

1. DJI-China will "eat" some or all of the tariff cost, or
2. DJI-America will "eat" some or all of the tariff cost.

No business will successfully absorb a 145% tax [if that's even the applicable rate] for more than a short period without passing that cost on to consumers. It's inevitable that it will result in a price increase for the end consumer.

what you really learned today is DJI is 100% responsible for paying the tariff.

You write that as though you think it's some sort of an "Aha! I told you so!" moment, and yet we're both agreed that it is the US importer who pays the tariff.

Basically, the only thing we're arguing about is how much of that tariff cost will be passed on to the end consumer.

In your same "Aha!" thread, read the post by @Vic Moss where he quotes this response from DJI;

"Dock 3 with Matrice 4TD Ready to Fly kit: $9100 (pre-tariffs) and $15,199 (post tariffs)", and "Matrice 4T: $7280 (pre-tariffs) and $12,159 (post tariffs)"

(15199-9100)/9100 = 67%
(12159-7280)/7280 = 67%

The prices increased by exactly 67% in both cases. Coincidence? What was the applicable tariff rate when these units were imported into the USA?

 

[Zbip57]

Making people pay more for stuff, just to be able to take that extra money, just seems wrong somehow. Seems like a sales tax.

That's exactly what it is. Tariffs are a sales tax on any non-exempt products imported from other countries.

On "Liberation Day" a global 10% tariff was announced on every other country [curiously excluding Russia and North Korea], [also excluding Mexico and Canada because we were already hit with 25% tariffs]. Much higher tariffs were announced on particular countries, as per the charts displayed during the announcement.

Countries that dared challenge these new policies, by imposing their own counter-tariffs, were met with ever-escalating new tariffs. Last I heard, China is up to 145%.

Whatever the actual tariff amount is applicable from one day to the next, it is a new sales tax paid by Americans on every product imported from other countries. That tax is paid by the importer. Whether the importer chooses to "eat" that expense on his own, or chooses to pass some or all of the expense to the end consumer, it remains a tax imposed on Americans.

 

[msinger]

There are plenty of countries not engaging in a ridiculous trade war with China and still buying Chinese products.
USA only accounts for approx 15% of China's total exports.

But let's step back into reality for a moment. Countries need each other. Trade is essential, and eventually, cooler heads will prevail and some type of agreement will be made.

And let's be honest, other countries likely aren't going to pick up all the slack, even if 15% (of anything) sounds insignificant to you.