"The effect of a 25% Tariff on our models coming from China would translate into a 6% to 10% increase in our prices depending on the type of project affected. Tariffs can be turned on anytime after June 17th. They will affect any project that has not departed the Chinese Port as of their effective date. Tariffs may never be turned on if there is a Trade Agreement. The decision rests with POTUS. Lets hope there is a Trade Agreement.  We have looked into every possible alternative but most alternatives would cost more than just paying the Tariff.
Stay Tuned: Scott Mann - CEO Sunset Models"

I would ad Scott, it's not just up to POTUS but also the Chinese Gov to start playing fair.  

 

Original Post

I don't know about others, but I fully expect to pay the additional cost associated with items I have on preorder. I feel it is time to level the trade playing field, and that means most all of us will have to bite the bullet a bit, especially when it comes to fully discretionary items.

 

Hopefully this whole thing works out to where we end up with a decent trade deal that remediates some of the real issues out there with China that allows for fair trade and benefits all and doesn't end up ruining jobs and like that the fair trade rules are supposed to help protect (just a wish). One of the things I hope comes out of this is people on all sides realize that when you have a trade war, there is a cost to it, that when tariffs are put on they aren't paid by the export country (and apparently there are a lot of people out there who believe the exporter pays it, that it won't affect them), they aren't paid by the importer, they are paid by the person who purchases it via higher prices.  One of the important things to come out of this (I hope) is that people wake up and realize that there are consequences and costs to things, that for example the cheap tv sets we buy happen because they are made in China, and that that had a cost with it with jobs elsewhere, that if a trade war happens that there will be consequences to themselves in terms of higher prices and also perhaps limited availability of certain items. I agree with Allen that if a trade war will force a trade agreement that remediates the not so great sides of trading with China then we all have to be prepared and willing to pay the price for doing so. 

The person who dies with the best toys dies a happy person

The trade deals have favored the Chinese for WAY too long and have cost us dearly as a producing Nation. In regards to our topic at hand: IF we can afford toys then we can deal with a 8-10% tariff. IF not, then one probably has no business in the hobby, for it is an expensive hobby, period.

There have been times in my past that I modeled on a shoestring, and if our budge meant I couldn't afford a model item, then I did without, or saved my hobby pittance until I could purchase the item, or figured out a way to generate the funds needed to purchase. Of such is life.

Andre

Contrary to what the POTUS repeated says, and as noted above, the cost on tariffs on imported goods and materials is paid FULLY by the American public.  A tariff is a de facto tax that is paid by the importer of the goods or materials.  It is NOT paid by the country of export.  Someone in the U.S. is paying for the full cost of the tariff.  It could be absorbed by the importer, passed on to the American customer, or shared between them. 

I applaud Scott's efforts at keeping the customer's increase at only 6 - 10%, in the face of a possible 25% tariff.  That means that he is eating the balance of this tax (tariff). This can't be an easy thing to do when running a small business.

I fear that likely 1000's of small American businesses will not survive the trade war, especially if tariffs rise to 25%.  Retaliatory tariffs also hit Americans engaged in the export of products to China, buy driving up the price for this products.  Folks also need to keep in mind that any payments to specific groups (like farmers) are payments from our tax dollars and not paid by the exporting country.

Jim

Formerly Historic Frederick County, Maryland.  Now close to Baltimore.  Modeling both the Reading and B&O Railroads.

 

Alastar 'Bear' 3/8/06 - 8/24/15, one heckuva great dog!

"I applaud Scott's efforts at keeping the customer's increase at only 6 - 10%, in the face of a possible 25% tariff.  That means that he is eating the balance of this tax (tariff). This can't be an easy thing to do when running a small business."

Remember that the 25% applies to the manufactured cost of the item, NOT the retail price later on.  I certainly don't know 3rd Rail's cost structure, but if we hypothetically assume the item cost is 60% of the MSRP, a 25% tariff amounts to 15% of MSRP.  Unless 3rd Rail's cost is much lower than this, they are definitely sharing some of the pain but not as much as JD-TRAIN's post would imply.

There are some products which are not subject to the tariff. Not that I disbelieve Scott at all, but I'd sure like to see some evidence that the product I'm buying, whether it be trains, sneakers or refrigerators, is subject to the tariff before I agree to pay an additional 10% - 25% for it.

Is there some sort of list that designates trains as subject to the tariff ?

 

Bob posted:

"I applaud Scott's efforts at keeping the customer's increase at only 6 - 10%, in the face of a possible 25% tariff.  That means that he is eating the balance of this tax (tariff). This can't be an easy thing to do when running a small business."

Remember that the 25% applies to the manufactured cost of the item, NOT the retail price later on.  I certainly don't know 3rd Rail's cost structure, but if we hypothetically assume the item cost is 60% of the MSRP, a 25% tariff amounts to 15% of MSRP.  Unless 3rd Rail's cost is much lower than this, they are definitely sharing some of the pain but not as much as JD-TRAIN's post would imply.

I don't think that the retail markups are as high as some folks assume. 

In any event, even the loss of 5% - 10% to an importer on a $1,700 item is $85 - $170 per item. So if one paid an average of $127.50 per item on 500 items, this is an unplanned cost of $63,750.

Maybe a large business might be able to ride out the tariffs over a longer time and absorb the loss, but I'm not so sure that many smaller businesses can.

Jim

Formerly Historic Frederick County, Maryland.  Now close to Baltimore.  Modeling both the Reading and B&O Railroads.

 

Alastar 'Bear' 3/8/06 - 8/24/15, one heckuva great dog!

I have nothing on preorder with him, but I believe him to be one of the better people in the business. I wouldn't cancel an order just because a price increase was caused by matters outside his control, especially when these matters should have been dealt with by our government 30 and more years ago. We have  been plagued with trade imbalances and "unfair business practices" at least since the Belgians were dumping government-subsidized steel on our market in the '60's. You know what happened to our steel industry.

John 

 

 LCCA PCA TCA

 ILLINOIS RAILWAY MUSEUM        

 www.irm.org   

 

 

 

I have several costly items on order with Sunset/3rd Rail and will honor my purchase commitments no matter what. But, as a retiree, the prices of their brass steamers and even diesels have become a disincentive for me to continue ordering, especially since I already have a more than adequate collection of model trains to run and look at. Further price increases due to tariffs would definitely keep me out of the market. However, if these models were made by American workers in the USA, I would be a buyer even at the increased prices.

MELGAR

Many small sellers dealing in craftsman products follow the "1/3 business  model."  That is: 1/3 is cost of goods, 1/3 is overhead, 1/3 is salaries.  So s 25% tariff would be at a minimum an 8.3% increase in price to the purchaser.  Scott is a good person so he's not going to pass a 25% price increase as some might.

As to what is on the tariff list you will find railroad equipment and electronic components and boards (think ERR).  By the way, that 1:1 equipment.

Jan

Good job by Scott of getting in front of the issue with his customers.

I know it's not the politically correct way to look at the cost but.....  losing a job in the USA puts a person on unemployment, food stamps, Medicare, etc at a cost to the govt (that's us).

Getting the person a job reduces or eliminates that cost to the govt AND makes them into a taxpayer (more revenue for the govt)

Not good for politicians and the media, but good for everyone else.

You're already paying the cost, you just don't see it in the price tag.

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