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25% Tarriff

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Forum topic by MrRon posted 05-23-2019 07:03 PM 786 views 0 times favorited 38 replies Add to Favorites Watch
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MrRon

5485 posts in 3633 days


05-23-2019 07:03 PM

I have a few back issues of the HF flyer that I have been comparing and find that the prices don’t vary by more than 2 or 3 dollars from a past flyer to a current flyer. In fact some prices have come down despite the tarriff imposed on Chinese goods. How can this be? The reason why is because HF imports, distributes and markets all their own products, so they can afford to adjust their prices up or down as needed without hurting their bottom line; a one stop shop so to speak. Companies who get their products manufactured in China have a separate distributorship, wholesaler and other links in the supply chain. That results in a cumulative increase in cost when divided between many links in the supply chain. While Black & Decker for example could see an overall increase of more than 25% tarriff, HF would only see a smaller increase in tarriff. Just thought I would present my reasoning of why different companies will see different price increases.


38 replies so far

View PPK's profile

PPK

1403 posts in 1199 days


#1 posted 05-23-2019 07:52 PM

Hmm… Interesting reasoning, MrRon.

Here, I’ll throw in a conspiracy theory – Maybe HF is doing blackmarket deals and they’re “getting around” the tarrifs all together and that’s why they can get away with little/no price hikes :)

-- Pete

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Rayne

1207 posts in 1929 days


#2 posted 05-23-2019 08:06 PM

I think it’s based on what inventory a company has on hand in the US versus constantly ordering from China. Grizzly is likely to feel the pinch far faster than HF, since they probably do have a lot of inventory already here in a warehouse.

View Kazooman's profile

Kazooman

1317 posts in 2341 days


#3 posted 05-23-2019 08:10 PM

The stuff HF has on their shelves was probably all in the US before the 25% tariff was in place. Some businesses will go ahead and raise prices anyway and take some windfall profits. Perhaps HF prices will rise like you might expect when the proverbial slow boat from (to) China arrives in port with highly tariffed goods.

Note added:
Well, Rayne beat me to the logical explanation by four minutes. My hunt and peck typing style takes about that long!

View TravisH's profile

TravisH

670 posts in 2324 days


#4 posted 05-23-2019 08:27 PM

A tariff is paid on a good once brought across the border. Not like every step of the way in China additional costs are being added.

It has been documented over the past year the cost of manufacturing has not changed in China the costs is applied/absorbed majorly by US Importers. In your scenario HF as the single importer of their goods has no ability not absorb the entire 25%. Companies that source from importers have room to negotiate and get a better price break as there is competition for their business.

Harbor freight likely benefits from the fact a 25% increase on a dime versus say Dewalt’s 25% increase on a $2 buck similar item. So how does that 2 to 3 dollar increase on the HF item compare in markup versus the Dewalt mark up. Frequently you will find the HF or similar style company is up charging significantly more. Not everything is made in China either so source stuff from India, Taiwan, etc… very easy to source when quality is less of a concern. Dewalt and other companies imported goods will/have started to shift to other currently “friendly” countries for source of origin. Now they may still increase prices based on all sorts of claims.. uncertainty in the market, the blanket statement costs have gone up, etc….

Even then not a big deal to the companies as the cost is passed, for the most part, directly to the consumer (well if you live in the real world, some individuals like to paint a picture of China paying the money directly to the US. Does the USA also then directly pay China for their tariffs?). Very few examples of tariffs working as intended unless price increase to the consumer is the intended goal.

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SMP

1042 posts in 295 days


#5 posted 05-23-2019 08:31 PM


The stuff HF has on their shelves was probably all in the US before the 25% tariff was in place. Some businesses will go ahead and raise prices anyway and take some windfall profits. Perhaps HF prices will rise like you might expect when the proverbial slow boat from (to) China arrives in port with highly tariffed goods.

Note added:
Well, Rayne beat me to the logical explanation by four minutes. My hunt and peck typing style takes about that long!

- Kazooman

Yes, in theory tariffs won’t have an immediate effect on price. But here is an example of what can happen:

Retailer A buys his stock from Wholesaler B. Wholesaler B gets their inventory from supplier C. Supplier C has 6 months of inventory of a product purchased previous to the tariffs taking effect. Wholesaler B watches the news one morning and decides to raise his prices 25%. Retailer A asks why and the response is “tariffs”. Retailer A marks up his prices 25% to Customer Bob. Bob also watches the news, sees the price increase and shakes his fist at the guy who implemented the tariffs.

Of course just 1 possibility of an oversimplified supply chain model with only 1 corrupt human. Also, this may happen with tools made in China or not, even tools made in India may get their wholesale prices increased.

View DannyW's profile

DannyW

145 posts in 187 days


#6 posted 05-23-2019 08:58 PM

I haven’t seen any recent price increases but it seems to me there have been some pretty massive increases over the last year or 2 that I attributed to the previous tariffs. I don’t have any older flyers to compare however so I might be dreaming.

-- -DannyW

View JayT's profile

JayT

6209 posts in 2600 days


#7 posted 05-23-2019 09:27 PM

Two elements.

One: Items on the sea or in US warehouses are not affected by the increase in tariff from 10% to 25%. There is a 60 day window before it actually takes effect. Prices will go up if they are on the new list, just not necessarily right away.

Two: A lot of the things we as woodworkers buy, such as machinery, were already subject to the 25% tariff that went into effect last year. As such, they are not included in the current list that has an increase. I expect a lot of blades, bits and other accessories to go up, but most big ticket items are already at the higher level.

Also, the “current” flyer would have gone to print before the tariff increase was announced. There is no way to cancel, re-plate, re-print and distribute in the time frame we are talking about. Save the old flyers and wait a couple months to see what all was affected.

-- https://www.jtplaneworks.com - In theory, there is no difference between theory and practice. In practice, there is.

View Kazooman's profile

Kazooman

1317 posts in 2341 days


#8 posted 05-23-2019 09:30 PM


The stuff HF has on their shelves was probably all in the US before the 25% tariff was in place. Some businesses will go ahead and raise prices anyway and take some windfall profits. Perhaps HF prices will rise like you might expect when the proverbial slow boat from (to) China arrives in port with highly tariffed goods.

Note added:
Well, Rayne beat me to the logical explanation by four minutes. My hunt and peck typing style takes about that long!

- Kazooman

Yes, in theory tariffs won t have an immediate effect on price. But here is an example of what can happen:

Retailer A buys his stock from Wholesaler B. Wholesaler B gets their inventory from supplier C. Supplier C has 6 months of inventory of a product purchased previous to the tariffs taking effect. Wholesaler B watches the news one morning and decides to raise his prices 25%. Retailer A asks why and the response is “tariffs”. Retailer A marks up his prices 25% to Customer Bob. Bob also watches the news, sees the price increase and shakes his fist at the guy who implemented the tariffs.

Of course just 1 possibility of an oversimplified supply chain model with only 1 corrupt human. Also, this may happen with tools made in China or not, even tools made in India may get their wholesale prices increased.

- SMP

Check my second sentence.

View Desert_Woodworker's profile

Desert_Woodworker

1805 posts in 1604 days


#9 posted 05-24-2019 12:38 AM

-- Desert_Woodworker

View CWWoodworking's profile

CWWoodworking

484 posts in 568 days


#10 posted 05-24-2019 12:59 AM


- Desert_Woodworker

That China shirt should be about 5$, not 12

View DannyW's profile

DannyW

145 posts in 187 days


#11 posted 05-24-2019 01:05 AM

That is very misleading. The tariffs are based on the importer’s price (probably close to $4), not the retail price, for an added cost of $1 and making the Chinese shirt $13, not $15.

-- -DannyW

View AlaskaGuy's profile

AlaskaGuy

5279 posts in 2698 days


#12 posted 05-24-2019 01:06 AM

Thank the Lord Alaskan muktuk is safe from high tariffs.

-- Alaskan's for Global warming!

View CWWoodworking's profile

CWWoodworking

484 posts in 568 days


#13 posted 05-24-2019 01:15 AM

I have a gift shop I sell to. They had some scarfs that they bought at a show for 8$. They found the exact scarf on Alibaba for 4$ delivered.

My guess is a US made version would be 10-12$

This is a no name gift shop in the Midwest. What do you think Walmart is buying scarfs for? A buck? Maybe.

The point is 25% tariff is nothing if the product cost pennies.

View Desert_Woodworker's profile

Desert_Woodworker

1805 posts in 1604 days


#14 posted 05-24-2019 01:17 AM



Thank the Lord Alaskan muktuk is safe from high tariffs.

- AlaskaGuy


No pun intended, but the whale could soon be extinct- so instead of a tariff, people pay “whatever” for a jar of “muktuk”

-- Desert_Woodworker

View CWWoodworking's profile

CWWoodworking

484 posts in 568 days


#15 posted 05-24-2019 01:19 AM



Thank the Lord Alaskan muktuk is safe from high tariffs.

- AlaskaGuy

Muktuk?

showing 1 through 15 of 38 replies

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