The specific (fictitious) example they gave was $100 -> $150 due to a ~$23 tariff.
> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
> The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
That's how it was working in most wealthy countries, where tariffs were generally low or very low.
I don't see why it must continue to work that way in the USA with 50% or 100% or more tariffs. If Footlocker wish to charge double the post-tariff price, that leaves room for a competitor to change double the pre-tariff price.
(Or double the pre-tariff plus a tiny bit, to account for the increased cost of insurance, theft etc.)
darknavi|10 months ago
> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses.
The point being that many parts of the supply chain don't operate on fixed costs and instead percentages.
Symbiote|10 months ago
That's how it was working in most wealthy countries, where tariffs were generally low or very low.
I don't see why it must continue to work that way in the USA with 50% or 100% or more tariffs. If Footlocker wish to charge double the post-tariff price, that leaves room for a competitor to change double the pre-tariff price.
(Or double the pre-tariff plus a tiny bit, to account for the increased cost of insurance, theft etc.)
kjkjadksj|10 months ago