Tariffs

[KE4AVB]

First I not trying to get political here just stating how things appears to be headed. It just a financial post.

Well guys it looking like we are in for major price increases in the near future. DJT is now saying he wants to put 25% tariffs on Mexican and Canadian Goods on day one. If he does this and adding the other tariffs he planning on enacting this will cause huge problems for me as customers are already balking on repair bills. It very possible I be ran out of business next year because of this.

And I done had my one of my Husqvarna distributors raise their prices by a lot by enough that it has increase my retail value in stock items by 8K. I ran the inventory before and after. I started out at 92K retail and now it is 100K. This is using lowest one from the two distributors. And this is just on items I have in stock. This happen sometime after the first week of October. I was researching some replacement parts when I found parts I was installing are now higher in cost than the October retail prices. Otherwords if I had sold the parts via the October price file I would had lost money on the parts. Otherwords the retail preciously was on one item 9.99 and now it is 19.06. Previously it had costed me 7.56 and now it is 16.20. Just can't be doing that and stay in business.

Plus a lot of our food comes from of these countries. He can't lower food prices if the suppliers are getting hit with additional costs which they will pass along. Getting rid of our farm workers are also going to cause a lot of problems too as American youth is just too darn lazy to do manual labor. Locally we farmers that their kids flat refuse to work on the farms.

And look at just was report about Retail credit cards were some of the interest rates are not hitting 35.99 apr. Personally I will bypassing Christmas long term purchases this year. I was planning on updating the appliances but that is now on the only if necessary table.

[bgsengine]

Yeah. it's something I've been aware of for quite some time, especially at the grocery store. I'm old enough to remember when $40.00 bought a shopping cart full of groceries (8 bags or so) and on the way home, we'd stop to fill up the ol' Mercury Marquis and give the pump jockey a $20 bill and get change back! (not to mention while tank was filling, he'd check oil, wash windshield, check air in tires, all that good stuff) Nowadays $40 buys maybe a bagful, two if you're real thrifty, of groceries and 20 bucks in gas is about a 5 gallon can (in some places) Being on fixed income here, we also have had to cut back seriously - even going out to eat for two is exceeding $50 just for a burger and fries each, we're planning an even bigger garden in 2025 not just to save on groceries and for preserving, but also sell at the local farmer's market, which has suddenly become worthwhile because cost of groceries has gotten so high, we can sell at a competitive price and make a little more than just "pocket change".

More folks are going to have to get back to basics, you can pay for convenience (if you can afford it) or have to figure out how to make do without. OTOH, cost of new machines may also increase to where the higher cost of repairs becomes the norm (Have to be watchful that you suddenly find yourself being the cheapest shop in town, and start getting the PITA customers again)

On the other hand, if it brings factories and jobs back to the USA, we become less dependent on imports, so other countries (including likely enemy states) will have less impact on our economy. Just imagine if China all of a sudden stopped shipping product to the USA completely - Who do you think would hurt fastest and first? the country with the factories or the country that depends on the output of said factories? (What happens if suddenly Apple can't get iPhones made, Electric equipment makers can't get Li-Ion batteries because China shut off Lithium exports, Auto makers can't get critical parts or chips and factory production stops, cause they can't build nothing? - Moving some of that manufacturing to USA would improve that economic security...which is why I bought some stock in domestic rare earth metals mining companies...there's been some promising finds in Europe, Greenland, and other, friendlier, countries)

So, I can see the points of view either way, but in any case, it means us, the little guys, get to pay the price in the end... Inflation is inevitable until we can source our own supplies and reduce demand, then prices either must go down, or factories stop producing unprofitable product (Law of supply & demand, obviously) So if you have even a smidgen of spare time and a little space (containers on patio or deck?) you can always get into container gardening for fresh veg.

[KE4AVB]

Considering how interconnected our factories are worldwide currently it going to create a lot problems with tariffs being added to most of the items. And it takes years to build factories and then to train new personnel to operate all the new equipment. And this is not going to happen overnight either.

We are in for a heck of trouble if things goes as they seems to be headed to. Politicians can really screw things up that they don't anything about.

One of the problems now is a lot of the current businesses and workers are simply not doing their jobs anymore. Here I depend on accurate and up to date pricing files to be provided by the vendors. Well Gardner has been screwed up over an year now where they provide only info on what is on the new system without any regards to NLA and supersedes. The next to last MTD file had over 171,000 part numbers with NLA and supersedes noted from RBI. Now the last file from Gardner only has 134,000 items and my system says their are over 28,000 new part numbers in it. So what happen to all the missing numbers? Are they just NLA or are some superseded? IE as products become NLA or are superseded they simply get lost on my system and in my inventory. And recently RBI has update their system and are currently no longer providing price files either. With these problems I am simply using up what is the inventory and not replacing it; unless, I need it for a job.

This lack of pricing files is resulting in a lot extra time here in trying find if I have the part(s)in stock or not and what is the current pricing is. Does no good to have a system of inventory tracking if the distributor cant or won't provide the needed info. The software I use is very at doing this when it has up to date info loaded and does save me a lot of time hunting for the info. But now it is becoming useless because these files not being updated as they should be. Computers are only as good as the info fed into them.

To be honest here we have lost too many good workers and the replacements are just not as knowledgeable plus they are kinda on the lazy side too. This attitude of its not my job is a major problem. And doesn't help where upper management don't want those that try to get things correct to do it.

Anyway it a good time of the year to gets things inventoried and packed anyway for next year but first I got get the home improvement project out of my hair that a customer snagged me into. Dang it I should have never learned how to do it years ago but he is willing to pay for it. At least it will be done right and not what the previous so-called repairmen has done. Man what crappy workmanship I seen this week. Being a 100 yr old house I need to sister boards on the rafters just to get fascia boards reattached. Got to have something to nail or screw to and not 1-1/2" dry rotted tips. And then his 30 yr garage needing all the vinyl fascia pieces replace as the under eves vinyl is falling out. I going try to talk him into letting me install aluminum fascia instead replacing it with vinyl again. As I said it is an one screwed up project to straighten out. And don't even get the termite infested lower portion of the garage or bad roof. Repair that is going more than just tearing everything down and building new.

[KE4AVB]

Well with the DJT tariff threats I am issuing my own executive order. From now to the near future an additional 15% tariff is being added to all of my companies part sales. Unless the tariffs actually 15% or higher then it is to be 5% above that tariff in addition to the normal 35% markup. As I might as well get on the gravy train too. Besides it is going to be a paperwork nightmare.

[KE4AVB]

Well I warned my customers that the Tariffman would do this and now he started a trade war. Hope everybody happy paying an additional 25% plus whatever the sales tax adds. Plus whatever happens as the war rages on...

I will start reworking all the price files here and applying them as of Tuesday. Labor just shot up from $70/hr to $90/hr and all senior discounts disappeared.

[bgsengine]

Sounds about right... which is another reason I'm glad I closed up shop when I did -no one around here would pay that much to get a lawnmower fixed, so I'd be out of business anyways other than parts sales (and local hardware stores already sell Stens, Rotary, etc. aftermarket, and they discount.)

[KE4AVB]

BGS,

The problem here is many shops are already over $100 per hr. It mainly because the state taxes everything, even our end of the year stock inventory when they know about it. Otherwords they want their tax revenue even if don't sell the items until later which of course they want to tax it again. I simply do not pay these extortion taxes. I do pay my fair share of taxes as intended but not those taxes that are back door trickery.

Monthly building rents are ridiculous they act we making a fortune and they want most of it.

It been a long time practice of mine to cut the billed labor time vs actual time on the low cost items to help out the customers. But with the Federal government pissing me off I am probably going start refusing this area of the business saying repair cost exceed the equipment value.

And as you said customers are buying parts from places like Amazon and the online after market suppliers. They have tried bringing in the parts and expect me to do the repairs for free.

[bgsengine]

Yeah, though Inventory is just cash sitting on the shelf, so difference between beginning and ending is just money to be taxed.. Another reason I closed down - had to carry so much inventory to make minimums, and couldn't turn the inventory fast enough. Eventually had over $50,000 sitting on the shelf (at dealer cost), and took 18 months to finally liquidate it all and netted $4500 out of it all. Finally got a little smarter and been putting my money into ETF's and letting the dividends pay some bills.. and I don't even have to DO anything.

[KE4AVB]

And with the recent tax law changes, those EFTs profits have now taxes too.

Now that the reason I have greatly reduced my inventory due to taxation which causing turn around time problems.

I have been checking the economics of this 25% tariff. They are charging it on the purchase price (the vendors source sale price). So for the source to make the same money as before they have to raise the prices by a third. Otherwords they got to apply 25% GPMU as once you got that price the government wants to take 25%.

GPMU Formula
100 / .75 = 133.34

Sales Price
133.34 *.75 = 100.00. The .75 (75%) removes the tariff costs.

This is actually a third increase the sale prices. Hidden cost to say the least. They making sound less than it actually is.

So basically in order to make the same profit we have to increase prices by a third on the items that the 25% tariff is applied to and have increase price by a little over 11% to cover the 10% tariffs. So say your fuel was $3/gal it would have to be $3.34/gal just to cover the 10% tariff.

It might look we making the same profit but in reality we are making less due increase overhead. That is if we don't just fold our legs up and close the shops.

Saying this might be painful is understating it. I just hoping some reality kicks in they remove the tariffs but for the current time we all will be paying around a third more. The ultra rich don't have to worry about putting food on the table they just take it someone else.