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Please avoid politics. This is an exercise in arithmetic.
Pres. Trump has announced Feb. 1 tariffs on Canadian goods of 25%. Without repeating all my arithmetic, that would raise the price of a Canadian banjo selling in the U.S. for a 20% discount from a $2,000 list price, from $1,600 to $2,000, presuming the seller passed on the entire cost of the tariff to the buyer. That’s a significant difference. The tariff will similarly affect Canadian-made cases and parts. What tariffs might hit European-instruments and parts (e.g. Prucha) I have not seen yet.
Edited by - Texasbanjo on 01/27/2025 11:15:07
Keeping in mind that the tariffs will be paid by the importer not the exporter, the importer will have some wiggle room to decide how much of that increase in cost (the tariff) s/he passes on, right? In order to stay competitive, I should think the inevitable increase in cost might vary according to the nature of competition.
However you do the math, though, any tariff increase will be paid by the buyer, not the seller.
Not only banjos and cases, but when road bands start having to pay 25% more for gas or diesel it could hurt them badly.
"In 2023, the United States imported about 60% of its crude oil from Canada, making Canada the largest foreign supplier of crude oil to the U.S. This is about five times the amount of oil imported from Mexico, the next largest supplier."
Edited by - chuckv97 on 01/21/2025 12:19:38
Not all the cost will be passed onto the buyer. There are 4 categories. A SIMPLE ECON DISCUSSION.
1. The foreign good isnt made in the US. These goods will be exempted if the US has no interest in making said goods.
2. The goods are made in the US at a price competitive (Equal) to foreign manufacture. In this case the seller will either absorb the tariff or stop selling said goods in the US.
3. The US makes said goods for more money than foreign competition. Then the buyer will pay the tariff.
4. The US makes the goods cheaper than the foreign source. Tariffs dont matter much because export to the US would be luxury versions of said item only.
The Tariffs wont be 25% to Canada, energy is exempted (the main export), think around 10% depending on the good. That is what they were before NAFTA.
So a new banjo made in Canada for 2000 will cost 2200 plus about another 8% state sales tax, total around 2360 be my guess.
What if the USA doesn’t produce/make enough of said goods to supply the demand? They’ll have to import,, unless they can immediately ramp up production which is probably not easily or quickly accomplished.
I haven’t heard that energy would be exempt,, Alberta’s Premier went to Mara Lago last week to plead her case, Alberta being Canada’s big exporter of oil. (delete if this is too political)
quote:
Originally posted by chuckv97What if the USA doesn’t produce/make enough of said goods to supply the demand? They’ll have to import,, unless they can immediately ramp up production which is probably not easily or quickly accomplished.
I haven’t heard that energy would be exempt,, Alberta’s Premier went to Mara Lago last week to plead her case, Alberta being Canada’s big exporter of oil. (delete if this is too political)
That would be an extension of category 1. The US either has interest in meeting demand or not. If not, no Tariffs. I cant answer the rest without getting into politics and policy but the answer is out there in published expert insider wordpress.
Sorry to be a party-pooper, but I'm adopting a mindset much used on the remote reserves: "If it happens, it happens."
I expect tariffs could have some pretty unpleasant (?), and probably unforeseen,* consequences, but ..... ???
Tongue-in-cheek, Chuck... isn't there another option besides import or ramp up production? I.e. Do without.
* with allowance made for the inevitable after-the-fact, "This was entirely predictable." analyses.
The purpose of a tariff is to make imported products more expensive, thereby making competing domestic products more competitive. Yes, it will make imported products more expensive. That's literally the entire point, aside from some token revenue generation.
Great news for Deering, Huber, Sullivan, Yates, Pisgah, and all the other domestic banjo makers. Bad news for Recording King and Gold Tone. Unfortunate news for the Canadians and Europeans caught in the crossfire (if that even happens which I doubt).
Maybe I don’t get it,,, if tariffs make imported goods more expensive , and that bolsters USA goods purchases , again,, how can these domestic companies instantly fulfill the extra demand for their products? Doesn’t it take a lot of planning, hiring, training, retooling, etc to meet the demand? And if that takes time , won’t the supply/demand process make domestic products more expensive?
I dont think anyone in the US thinks anything will be instant...and Tariffs have always been levied nothing new. Its a decade long process of job creation, innovation, streamlining etc. This is what makes the US an economic juggernaught. Toyota, for instance, placed a plant in Princeton, Indiana in 1993 to avoid Tariffs instead of simply paying import taxes forever. It now employs 22000 people plus countless other vendors, shopping, restaurants etc. In the 3 years it took to bring it online, Toyota took the financial hit. Now they reap the rewards of staying competitive with the Tundra and some other models while the area enjoys going from minimum wage to 80k to 250k jobs galore. Toyota has now built a dozen facilities in the US.
I'm with you Chuck ^^ ... a cluster**** that economists will be able to explain [maybe even forecast?] perfectly several years after the fact. I suspect in essence it's mostly about, "You're not the boss of me." Too bad it's the have-nots that will bear the brunt. All IMNSHumbleO of course.
Edit: Or maybe everything will be fine ....The system will continue to operate as it's intended: "The powers that be will identify any problems and then solve them."
Edited by - Owen on 01/21/2025 15:54:25
quote:
Originally posted by KCJonesThe purpose of a tariff is to make imported products more expensive, thereby making competing domestic products more competitive. Yes, it will make imported products more expensive. That's literally the entire point, aside from some token revenue generation.
Great news for Deering, Huber, Sullivan, Yates, Pisgah, and all the other domestic banjo makers. Bad news for Recording King and Gold Tone.
Hm, I don't think it is quite as simple as that. The US manufacturers certainly import a lot of metal parts from outside the US. Hence, domestic banjos will also either have to increase in price or their margins have to get lower. Will the customers just accept increased prices or opt for lower priced foreign banjos even though those may have relatively and absolutely increased more in price but remain considerably cheaper than the domestic banjos?
Not politics, just reality.
There is this funny little thing that happens in a so-called free market economy: If prices for imported goods rise due to tariffs, US manufacturers and retailers will see this as an opportunity to raise their prices to a similar level just as a gut response. Just you watch.
I'm unclear why Bill limited the discussion to Canadian products. As far as banjos go, a good many of them (or a good many parts for them) now come from China. WIll not the same market forces apply to these products?
Yes, let's wait and see, but it's impossible not to conclude that prices will go up as a result.
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