> Let’s do the math: Take a kid’s bike that retails at a big box store for $ 150. Let’s assume that bike costs $ 30 to make. The rest of the cost is shipping to the U.S., warehousing, transport to the store, marketing, admin costs, customer service, warranty, retailer profits, etc. Whether the bike is made in China, Vietnam or Cambodia, the new 34-38% tariffs will increase the cost by ‘only’ $ 10-12. (The old tariffs are already part of the pricing.) Add overhead and capital costs on those $ 10-12 (financing and insuring the higher purchase price, etc.). Now the price goes up by $ 15-20, or about 10-13% of the final price of the bike.<p>That's a great explanation of the direct impact of tarriffs for a business like this.
> That is a factor that’s often overlooked: The Civic Type R—and also many high-end bicycle components—barely make sense from a strict business perspective. ... International trade has made it possible to pool the global demand for such niche products and make them all in one place, achieving economies of scale that make them (almost) cost-effective.<p>This is such an interesting insight that would never have occurred to me and seems to have a lot of explanatory power.
With the huge differences in per-country tariff, there seems to be a large incentive to reroute and relabel imports. E.g., build a bike frame in China, export it to a sister company in Japan, and export it to the US from there, claiming production in Japan. How effective are existing controls against that? (And what are they even, I'm ignorant.)
The supply chain impact on manufacturers in the US on contracts is overlooked in this tariff fiasco. For example - auto manufacturers enter into long term agreements as a fixed price for a product. The only negotiation point they may have to reset that price would be a government action, which a tariff checks the box. The genie is out of the bottle, lots of contracts will be negotiated and prices will go up.<p>I would like to think this is some kind of 4-d chess game to avoid rate hikes and to devalue the dollar, but on implementation it will accomplish none of the above with a sprinkle of recession.
It's the enshittification of the US economy, in a way:<p>The method of enshittification, as I understand it, is to create businesses with a moat that prevents competition, cheapen the product in every way possible, and squeeze as much rent out as possible. Also, extract as much as possible via debt.<p>The tariffs are the moat. The debt I don't need to explain (though Dems aren't great with it either).<p>It's all the opposite of competitive business and free markets.
An excellent summary that applies to many other small industries. Too bad the Trump Administration economists didn't read this article before coming up with their tariffs plan (of course considering its stupidity, especially in how the tariffs were calculated, it's plausible no actual economists were involved).
An essential question is, what is the political angle for Trump and the right wing? They know what they are doing. They know it will cause economic calamity.<p>They often seek to create calamity and crisis - with Covid; spreading fear (of immigrants, etc.), hatred and violence; disrupting health, education, and housing; international peace and security (NATO, Ukraine, etc.). You never see them spreading calm and peace - crisis seems necessary to their movement.<p>Tanking the economy does the same thing, but it is a much bigger step that impacts many of their supporters. What is their exit plan?<p>I expect part of their plan is to blame others: They will blame Democrats somehow, and other political enemies - it doesn't need any basis because the Dems don't have any effective means of refuting it to the public; whatever the GOP says becomes reality. I suspect they'll use it to ramp up hatred and fear, blaming their current objects of hatred such as immigrants, minorities, certain religions (a traditional object of blame, the right has already been normalizing antisemitism and general prejudice - which makes antisemitism inevitable. Rogan recently hosted a conspiracy theorist blaming Jewish people for 9/11, for example - how long before does he blames them for the economy, 'undermining President Trump'), liberals, etc.<p>Edit: I did some rewording
I've never been a political donor, I might've thrown $20 into a small donation a couple times. However, it seems <i>financially irresponsible</i> not to pour everything up to the legal limit into punishing everyone involved in this tax hike to the maximum extent.
the article ends with a FUD statement about certain products bieng no longer financialy viable in the world market due to them bieng priced out of the US, and insuficient demand, elsewhere.
This can only be accepted if there is no question about the obscene profits generated by all large manufacturers, where "not financisly viable" means
double digit profit and growth, rather than actualy unprofitable.
If there is real demand, and no way for large established industrys to meet it, then this will spur the creation of countless small manufacturers.,..............everywhere.
And that once it picks up speed, will be a good thing for comunitys worldwide.
Globalisation, only works for the biggest players
and sharpers, and for the smallest least developé countrys, there will still be the things they need on.the world market.
But ,ha!, that just me trying to see a brite side, the whole thing could be just the first stage in something much much worse.
early floyd...."Ive got a bike...you can ride it if you like"
excellent sound track for this world now
"the age of tariffs" ah yes, typical ethnocentric point of view of the US.<p>Does the author not know other nations have been engaged in charging tariffs for a very long time?
>> Our rulers seem to think that the U.S. imports more than it exports, so the net effect will be positive.<p>It is eye opening to see people so casually speak of American "rulers". Not politicians. Not business leaders. Rulers. That's new.
Why the light grey text on a white background? Seriously. It's every other website these days. I of course know how to fix this in Developer Tools but I resent that I have to.