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Walmart and Other Retailers Have Eaten the Cost of Tariffs. Now It Is the Consumer’s Turn.
As I reported earlier,,,, our favorite taco place raised the price by 17% since our last visit in July. I am sure they waited as long as they could. It always sucks to be poor but it must be brutal nowadays.
Pretty soon we will be eating saw dust to add bulk to ground meat. I observe these days people are overwhelming buying food rather than big screen TVs at Costco. And that is a bad sign of financial stress.
Cannot imagine the low income families survive under these circumstances.
What did Amazon pay (plus the tariff) for the stool landed?
Many products are marked up 25%-100% to the wholesaler and then the wholesaler marks the item up another 100% or more to determine the retail price (what we pay).
My point is that a 30% tariff (Chinese tariff) on a landed $1 product would equate to $1.30 landed (w/tariff). This would mean the wholesale price would be $2.30 (tariff passed through at a 100% markup to the wholesaler. Finally the wholesaler passes the tariff on to the retail price which doubled again (100% mark up) making the consumer price $4.30.
So, what you paid yesterday without the tariff at $4, is $4.30 today with the tariff. This would be about a 7% increase from yesterday's retail price based on a 30% tariff on the landed price (please check my math). So @Old_Joe 's 8% is pretty close.
I just wanted to point out the math regarding tariff on landed price verses what increase the consumer pays retail.
Q: Where does tariff money go when collected and where does it go?
A persistent misconception about tariffs is that they’re paid by the foreign countries whose goods are being taxed. In fact, the financial responsibility for paying a U.S. tariff falls squarely on the U.S. importer of record. This is the American company, business, or individual that is legally bringing the goods into the country. The money is paid directly to the U.S. government.
While the U.S. government collects the tax from the American importer, the private contract between the foreign seller and the U.S. buyer can specify who ultimately bears the cost. These arrangements are governed by international commercial terms, or Incoterms.
For example, under terms known as Delivered Duty Paid (DDP), the foreign seller agrees to cover all costs, including the tariff, to get the goods to the buyer’s destination. Conversely, under terms like Delivered at Place (DAP), the U.S. buyer is responsible for paying the import duties upon arrival.
Regardless of this private agreement, the check is written to the U.S. government by the registered U.S. importer.
These importers then face a choice: absorb the extra cost, which reduces their profit margins, or pass the cost along to their customers—wholesalers, retailers, and ultimately, American consumers—in the form of higher prices. Economic analyses consistently show that the vast majority of tariff costs are passed on to domestic consumers.
Where does it go?
Once CBP deposits the tariff money, its journey as a distinct “tariff dollar” ends. It flows into a vast financial reservoir from which nearly all federal government spending is paid.
Comments
Cost: $21.18.
I ordered another of the same item today.
Cost: $22.98.
Increase: $1.80 / 8.5%
Good luck, Mr. Powell.
Maybe folks will have to throw some tofu on the BBQ instead of beef.
Thanks, Donnie! You're the greatest.
Cannot imagine the low income families survive under these circumstances.
In @Old_Joe 's stool example:
What did Amazon pay (plus the tariff) for the stool landed?
Many products are marked up 25%-100% to the wholesaler and then the wholesaler marks the item up another 100% or more to determine the retail price (what we pay).
My point is that a 30% tariff (Chinese tariff) on a landed $1 product would equate to $1.30 landed (w/tariff). This would mean the wholesale price would be $2.30 (tariff passed through at a 100% markup to the wholesaler. Finally the wholesaler passes the tariff on to the retail price which doubled again (100% mark up) making the consumer price $4.30.
So, what you paid yesterday without the tariff at $4, is $4.30 today with the tariff. This would be about a 7% increase from yesterday's retail price based on a 30% tariff on the landed price (please check my math). So @Old_Joe 's 8% is pretty close.
I just wanted to point out the math regarding tariff on landed price verses what increase the consumer pays retail.
Q: Where does tariff money go when collected and where does it go?
https://govfacts.org/federal/commerce/so-where-does-tariff-money-go/ Q: Does this resemble a VAT (Value Added Tax)?