First, don't let this get into a political discussion otherwise the thread will get pulled.
We have been notified that as of September 1st, a 10% Tariff will be imposed on each shipment that we receive from China.
How will this affect us and our customers? We think, not that much.
First, as Tariffs are imposed on all exports from China, the Chinese currency looses value against the US$. We took the steps about 6 months ago to set our project costs with the Chinese builder in Chinese currency instead of US$s. So that will absorb about 1/2 of the Tariff's cost when we import the models in lower payments in US$ to the builder as the exchange rate changes.
The Tariff is applied to cost price of only the parts that are made in China. For Diesels, 1/2 of our model cost comes from Chassis parts made in Korea and Electronics that we supply from the US. For Brass Steam engines, almost all of the cost is from China. So actually the extra cost of the Tariff translates into about $20-$30 a Diesel and about $100 for a Steam Engine when factoring in the exchange rate.
If the Tariffs do turn on, which we expect them to do in September, we will pass on some of these costs to our customers, and absorb some ourselves. But it's not a 10% increase, more like 3% for Diesels, and 6% for Steam and ERR prices will rise about 5%.
NO POLITICAL COMMENTARY PLEASE. This is just to inform you that the Tariffs don't mean the demise of your hobby or the other Manufacturers. It will have a muted affect on price increases for now. At least that will be our experience. If Tariffs are raised to 25%, then cost increases will be proportionately higher. That will start to hurt business everywhere, so I don't think it will be in place for very long.
If you have any further questions please feel free to email me directly. There's an email link on the bottom of our www.3rdrail.com page.
