Given tariffs on Chinese goods are 145% or more, how much of that is really on the retail price of goods?
The US Customers service indicates that tariffs are on the cost of goods, excluding logistics, freight, shipping, marketing, profits, etc.
A very popular board game that has been around since the 1930s has a Manufacturer's Suggested Retail Price (MSRP) of $20, but the manufacture needs room for distribution, retail profit and its own profit margin, as well as marketing, and shipping. Typically, that means the cost of goods is about 20% of the retail price.
But let’s test that. One large retailer has in store specials for $9.999 from time to time. Amazon sells it for under $7.50.
Let’s assume that no one is selling at a loss, just a reduced margin.
Given the Amazon typical margin, and a manufacturer’s profit margin, likely the costs to the manufacture are less than half of the Amazon sale price, that includes shipping.
Shipping full containers across the ocean is about $5,000 or about $0.30 per game (add $0.20 for warehousing, trucking, handling and loading/unloading and other logistics). Or $0.50 in costs that are not tariffed.
$7.50/2 = $3.25 (half of the Amazon price)
3.25 -0.50 = $2.75 (non-tariffed costs)
Leaving $2.75 as the tariffed cost
2.75 x 1.45% =4.00 in tariffs
If the OEM just passes thru the cost of tariffs the MSRP jumps from $19.9 to 23.99
If the OEM wants more margin, they change to MSRP to $24.99
To the consumer it is a 20% increase, not a 145% increase.
Yes, the tariffs are in many ways bad, but they are not as catastrophic as some claim.
OBTW if you want to disagree with me, please be ready to show the invoices and shipping costs. 😎
Doug Houseman
Expert Member
Top Contributor
Fri, May 16