Given tariffs on Chinese goods are 145% or more, I mean seriously, that’s a lot, right? But like, how much of that actually affects the retail price of goods? The US Customers service says that tariffs are based on the cost of goods, excluding all the other stuff like logistics, freight, shipping, marketing, and profits. So, like, there’s more to it than just slapping a tariff on top of the retail price.
Let’s take this popular board game that’s been around since the 1930s, with a Manufacturer’s Suggested Retail Price (MSRP) of $20. But hold up, the manufacturer needs to make some money too, right? They gotta cover distribution, retail profit, their own profit margin, marketing, and shipping costs. So, the cost of goods is typically around 20% of the retail price. But like, let’s put this to the test. One big retailer has sales where they sell the game for $9.999, and Amazon sells it for less than $7.50.
Now, let’s assume nobody’s selling at a loss, they’re just cutting their margins a bit. With Amazon’s margin and the manufacturer’s profit margin, it seems like the costs to make the game are way less than half of what Amazon’s selling it for. And don’t forget about shipping costs, which are like $5,000 for a full container across the ocean, adding about $0.30 per game. There’s also warehousing, trucking, handling, loading/unloading, and other logistics that add another $0.20. So, like, $0.50 in costs that aren’t even tariffed.
So, if we do the math, $7.50 divided by 2 equals $3.25, which is half of the Amazon price. Then, subtract the non-tariffed costs of $0.50, and you’re left with $2.75 as the tariffed cost. Multiply that by 145%, and you get $4.00 in tariffs. If the manufacturer just passes on the tariff costs to the consumer, the MSRP goes from $19.90 to $23.99. But if they want to make more money, they could raise the MSRP to $24.99. So, to the consumer, it may seem like a 20% increase, not a crazy 145% increase.
Yeah, tariffs can be a pain, but they’re not as catastrophic as some people make them out to be. And hey, if you wanna argue with me, you better come prepared with some invoices and shipping costs. 😎 So, like, bottom line, tariffs are a thing, but they’re not the end of the world. Just something to think about, you know?
