Tariffs?

I assume you are wondering about train prices. Who knows? I haven't heard what's going to get hit next, beyond Walmart saying to expect their prices to rise. That's a lot of stuff, but not necessarily us. We are pretty far down the food chain.

So far, so good.   I'm hoping my latest order of boards from China gets in before the axe falls.

This really depends where trains, boards, and all else falls into. I know last October Mike Wolf was asked about if tariffs were going to affect all us and he had stated not as far as he knew(this was at the Toy Train Museum). I think it was Mike who was asked, and not Jack (Bachman) or Ryan(Lionel) but heck, my brain is a little rattled today.

Of course, that was then and who really knows what things are now. I believe it is possible to view what will or would be affected  by tariffs but can't remember where someone said you'd look.

Something I don't understand is why the USPS subsidizes shipping from China.  I can buy a regulator board from China, including shipping, cheaper than I can mail one across town.  It would seem that since China relies on the USPS to deliver the product to me, it should cost more to ship from China than across town.  One seller on eBay quoted just 50 cents to ship a product to me.

Postage from China is governed by 1874 international treaty, Universal Postal Union,  which provide for rich nations to bear a greater share of the postage costs from developing nations.  At that time, China was a developing nation.  China is still on the list, and the US and EU subsidize China shipping by about $500 million..  At last the US is beginning to look at the problem.

Jan

Well, as much as I benefit from this arrangement, I think we have to put a stop to that.  I don't think China qualifies as a "developing nation" any more!

Currently I don't believe that model trains fall in the additional 25% tariff.  The closest entry for the extra tariff on toys was 9503.00.00 for Toys, including riding toys other than bikes, puzzles and reduced scale model.  Although model trains are reduced scale models, they aren't considered toys since they are recommend for people 15 years old and above.  The age recommendation of 15+ prevents model trains from being registered as toys by the manufacturer and are not subject to additional taxes.  

gunrunnerjohn posted:

So far, so good.   I'm hoping my latest order of boards from China gets in before the axe falls.

Well, if it hits us, I have a bunch of pre-orders out there. No dealer can absorb that kind of whack, knowing what margins are already. I'm dreading an email from Charlie Ro. We are already complaining about pricing.

Guys....this topic could get political REAL FAST so....if it does, it is gone!

I was thinking the same thing.....a week ago.

China makes many things for the US that are wanted but not necessarily needed. I'm thinking they have way more to lose than we do. They will accept the new terms eventually; probably within the year.

Just saw this thread and I think it's a long way from political. A discussion of production and distribution costs seems well within the bounds. Let's keep the Ds and Rs out of it (that's always hard for me...lol) and we should be fine. I never understood the jitteriness about topics like this. Perhaps for the weak of spirit, this can be posted on the Real Trains Forum. 

I just searched a quick search for tariffs and the only thing train related is actually trains. Electronics are listed but I think it is more of the bigger market of washing machines, dryers, TV's, stereo's, and what would be more common household items. This of course doesn't mean that anything in the railroading hobby won't be affected as raw materials will go up in price. I would imagine that plastics & metals may already be affected but that would be just them coming in to the US and not being processed into our model trains over there and then coming here.

If you were to breakdown the percentage of what I stated above and compare it to the model railroading industry, I would imagine that the percentage comparison would be huge to almost nonexistent.

Example:

Modern appliances % = 60-80% of imports market

Model trains % = 3-8% of imports market

I really don't have data supporting those numbers obviously, but if you think about how many stores have modern appliances and how many hobby shops there are just in one state you can see what I mean.

Here in NJ there maybe maybe 100 stores hobby related. Now if you think about appliances you could have 10-15 in a decent sized town.

Alentown posted:

Just saw this thread and I think it's a long way from political. A discussion of production and distribution costs seems well within the bounds. Let's keep the Ds and Rs out of it (that's always hard for me...lol) and we should be fine. I never understood the jitteriness about topics like this. Perhaps for the weak of spirit, this can be posted on the Real Trains Forum. 

I believe I said "This topic COULD get political....."  Just a warning which is not out of line based on how these kinds of threads generally go....

Alan, 

Agree.  This is not about "thoughts" or "coulds"  on  tariffs based on a potential effect to the "toy train" world.

We are all effected in many, many other ways which is a topic for a different forum..

Enjoy what we have and "it will be what it will be"

Since I have my boards assembled in China nowadays (can't find anyone in the states), it hits close to home.  I haven't seen it yet, but I have a shipment coming in next week...

TBH, as long as the prices stayed the same, I wouldn't be too upset if we got our trains made in S. Korea again . 

GRJ,

Not sure what your total cost on you boards is, but my understanding that what is in "transit" should not encounter a tariff .. 

Our company has approx $80,000 of product on "the water from China" and we are trying to determine if  the increase to 25% will pertain to us (We are already paying the initial 15% on our goods.

OGR CEO-PUBLISHER posted:

Alentown posted:

Just saw this thread and I think it's a long way from political. A discussion of production and distribution costs seems well within the bounds. Let's keep the Ds and Rs out of it (that's always hard for me...lol) and we should be fine. I never understood the jitteriness about topics like this. Perhaps for the weak of spirit, this can be posted on the Real Trains Forum. 

I believe I said "This topic COULD get political....."  Just a warning which is not out of line based on how these kinds of threads generally go....

Personally Alan, I think everyone has been very well behaved on this topic so far, and it represents a very genuine concern for this hobby. If we do get hit with 25%, it will effect my buying habits, and I doubt I'm alone. Politics aside, this about our wallets, and I don't think anyone here doesn't care about that.

Honestly, I did my very best to get it started off on the right foot, because I did recognize that it had potential for trouble. If it does "go south", and I hope it doesn't, please just clean up the offending post(s) and lock it. Also, it might help to edit the topic title to something like "Tariffs on model trains?".

Personally, I don't mind paying a little more across the import spectrum if it means getting China to become a more reasonable player in the world market.

I have read suggestions in the press that tariffs on ALL goods coming from China are being considered. If that were to happen, and Lionel does major deliveries in 4th quarter as usual, I can see some serious issues ensuing. I have two steamers on pre-order. It would be problematic if they were to suddenly increase by 25%. I think a lot of people would cancel orders leaving Lionel and many LHS’s/train stores holding the bag.

What country's are manufacturing for Lionel, mth, and atlas?  That may provide some clue.  My retirement job is in a bike shop, tariffs have had an impact.  At least one manufacturer has shifted from China to Taiwan which has eliminated the tariff challenge.  Also, from my limited perspective, the Taiwanese sourced bikes are somewhat better.  Better quality, less variation in the end product.

Apples55 posted:

I have read suggestions in the press that tariffs on ALL goods coming from China are being considered. If that were to happen, and Lionel does major deliveries in 4th quarter as usual, I can see some serious issues ensuing. I have two steamers on pre-order. It would be problematic if they were to suddenly increase by 25%. I think a lot of people would cancel orders leaving Lionel and many LHS’s/train stores holding the bag.

That's what I was referring to in my earlier post. If that happens, I'll bite the bullet and pay it this time, but going forward I'll have to cut back on new orders to compensate. That hurts everyone along the chain.

Much of this tariff posturing is to provide an incentive to negotiate a more equitable trade balance, and that could be a good thing for all concerned.

gg1man posted:

Personally, I don't mind paying a little more across the import spectrum if it means getting China to become a more reasonable player in the world market.

I wish we actually knew if this approach was going to have that effect. It would be a little easier to get behind it. The problem is we don't know, and as of right now, we as US consumers are paying for it.

Another post mentioned that bicycle manufacturers are starting to move to Taiwan. It is much easier for them to leave China, than it is for the model train industry, which is so tooling heavy, and is effectively being held hostage. This brings us right back to getting China to play fair.

A 25% tariff doesn't automatically mean a 25% increase in price to the consumer.  That is on the wholesale price.  The increase in consumer price depends on the markup to retail.  Unless the distributor and retailer also increase their markup similarly, the actual price increase to the consumer should be significantly less than 25%.  And in many cases the retailer may absorb some of the cost increase to prevent losing sales.

SGJeff posted:

A 25% tariff doesn't automatically mean a 25% increase in price to the consumer.  That is on the wholesale price.  The increase in consumer price depends on the markup to retail.  Unless the distributor and retailer also increase their markup similarly, the actual price increase to the consumer should be significantly less than 25%.  And in many cases the retailer may absorb some of the cost increase to prevent losing sales.

In one of my earlier posts on this thread, I didn't take into account that the tax was on the wholesale price of the item - thank you for informing me.  That makes a big difference to the end user.  Currently I've been toying around with the idea of continuing to grow my LGB collection.  They're coming out with some great stuff between now and next year and I believe that I wouldn't have to pay any increases as long as there are no new tariff plans for the EU.

And I believe it was BIGRAIL who said:

BigRail posted:

China makes many things for the US that are wanted but not necessarily needed. I'm thinking they have way more to lose than we do. They will accept the new terms eventually; probably within the year.

...I'm inclined to agree with this statement - at least for the things that I actively consume.  Just goes to show that there's a lot of difference angles to the same story.

TO bad Weaver Models "MADE IN AMERICA" is no longer. 

There were several points about the manufacturers being captive to the overseas suppliers (China) because of the cost of casting, etc - thus the difficulty of moving to another country to escape the cost of tariffs 

Generally, who owns the patterns, dies, etc in this type of situation?

L.I.TRAIN posted:

TO bad Weaver Models "MADE IN AMERICA" is no longer. 

Weaver also had products made in China.

Rusty

Tinplate Art posted:

Much of this tariff posturing is to provide an incentive to negotiate a more equitable trade balance, and that could be a good thing for all concerned.

Art, you get it!

This is the real story here and the most insightful comment in this thread so far.

I think the end game here is to make all the tariffs - both ways - go away.

My understanding of who owns the tooling is, whatever goes to China, stays in China. Ownership is kind of immaterial. This is part of the price China exacts for cheap labor. It's policies like this that are part of the underlying reason for the tariffs in the first place. They have really locked in a lot of manufacturing, by not letting it get away. Labor costs have been rising in China, and there are countries that might be cheaper, but we can't get out. 

Fortunately, as a Postwar and MPC collector/operator, I - er...well, nevermind.

Unfortunately, one manufacturer has suggested that the latest round of tariffs will indeed affect our model trains. 

This letter/opinion piece by Jim Conway was included in the Con-Cor newsletter that was sent via email yesterday. Conway did stray into political territory, so please don’t comment on the Trump aspects or his take on China’s practices, pro or con. (And moderators, feel free to snip out the political aspects if you prefer.) But including his comments helps you understand why Conway decided to send this letter.

——————

 ———————-

 I’m not agreeing or disagreeing with Conway’s opinion in deciding to post it. Again, the intent is to provide input from one manufacturer on the current tariff situation.

It must be frustrating to a US model train company to deal with the way business is done in China. I know it's caused repeated headaches for them. (And has caused some to fold.) This is such a tangled web that has been woven.

Andre

Thanks for posting that Jim. It really sheds light on the situation without being heavy on opinion or politics. Sounds like there could be trouble for outstanding pre-orders. Ouch!  

As someone who started out with MPC/LTI, then went to HO- I’m strongly considering returning to focus on the older Lionel products again.  I’ve been on the fence for a while with HO and the skyrocketing prices; this night give me the final push. Something tells me I won’t be alone.

Short term pain (which just about everybody will feel); hopefully long term gain. At least that's how I see it. I'm ready to absorb some pain if it helps to level the playing field.

Allan Miller posted:

Short term pain (which just about everybody will feel); hopefully long term gain. At least that's how I see it. I'm ready to absorb some pain if it helps to level the playing field.

While I agree in general, Allan, my concern is for “the little guys”... I have two steamers on order from Grzyboski’s and two diesels coming from 3rd Rail. Neither of these vendors requires a deposit, so if the price increase is significant enough, many consumers may cancel orders and leave the vendor in the lurch which could jeopardize their continued existence. Personally, I have committed to purchasing these engines and will stand by my order... I hope the vast majority of other consumers will do the same.