Chinese Tariffs:
The Facts
The liberal press and never Trumpers are out in force pretending that the tariffs that are hitting are a tax on the poor and middle class. The claim is that everything becomes 15% more expensive as a result of the trade war.
Nothing could be further than the truth.
Here is one email sent out last night from a supplier that imports everything from China:
“Our prices will increase modestly because we are working hard to mitigate the impact of the tax increases on our customers. We are working with our factories to reduce costs; we are working with factories in countries that are not subject to the tariffs; we are absorbing as much of the tariff costs as we can.
As we have said previously, a 10% tariff does not imply a 10% price increase. The increases will be much lower than that, from 1% up to a few percentage points. “
What people don't understand is the vast profits made by importing products from low cost labor countries into high labor cost countries like the U.S.. An example is the simple ABS plastic cabinet leg. These sell for around $3.00 each in the U.S. But can be sourced from China in fairly small quantities for around eight cents. Few need a container load of cabinet legs but you can air freight them for about sixteen cents each, putting your import cost at 24 cents. Now apply that 15% tariff... six cents, bringing your total landed cost at 30 cents, one tenth the retail cost.