In the Black: November 2024

Tariffs: A Primer

You’ve likely heard about these in news as a policy the incoming administration is looking to implement but you’d be forgiven if you are a little hazy on the details.

So, let’s do a little refresh on how this works:

1. Goods are produced abroad for the U.S.

2. Goods shipped to U.S. face a proposed 20% tariff (some countries like China may face a higher %, up to 60%)
3. U.S. company importing goods pays 20% to the U.S. Treasury

4. U.S. company goes to sell the goods and has a few choices:

  • Pass the tariff to the customer, raising the price

  • Don’t pass it on and make less profit

  • Split the difference and raise the price some/ make less

OR

1. Find a different supplier, presumably the more expensive than the original option but perhaps less expensive than the imported goods plus tariff

2. U.S. company goes to sell the goods and has a few choices:

  • Pass higher supply price to the customer raising the price

  • Don’t pass it on and make less profit

  • Split the difference and raise the price some/ make less

You’ll see why economists and business leaders hate this plan, either consumers pay more or businesses make less, or both.

Are you someone who sells THINGS?

Why should you think about this and what to do? If your business relies on imported goods or goods created from imported materials (time to check where everything is made!), then this is going to impact you. Depending on how soon this gets rolled out, I expect prices to begin to rise by the end of Q1 2025.

If you are able to bulk order goods now to get them at a lower cost-you should. Either way, you need to consider if you are going to pass these prices on to YOUR customers and/or how to handle decreased profit. Can you look at sourcing these items elsewhere?

Didn’t we do this before? Some folks will remember that this is not the first time that Trump has implemented tariffs, so what’s the difference with this new proposed round. Previously, tariffs were levied on 14% of SOME imported goods- the proposed next round would be a blanket tariff of ALL imported goods.

How much will they be? The number we keep hearing is 20% as an across the board with a higher rate for imports from China and Mexico of 60-100%!!!!

​How soon will this go into effect? It’s difficult to know but the President-elect does not need to put this to a vote, so it could be anytime.

Scrooge McDuck explains Inflation

Liz & The Team​

Berit Bailey