General

Aerial view of shipping containers and cargo ships in the sea port of Barcelona in Spain, Europe. Concept of sea and maritime trade and trade war due to tariffs. Commercial hub

Tariffs, Prices, and Costs. Oh My! – Updated

Update

Player Who
Seller Company in China selling the item
Vendor Company in Canada buying from Seller
Customer Company in the US buying from Vendor
Amazon Large retail website

The world is ending because the United States is imposing tariffs on other countries. This will cause the economy to crash.

Amazon was going to put up a “this product cost you $x in tariffs” to drive home just how evil tariffs are.

That is not what happens.

Let’s consider a tool I purchased recently. It cost me $45, it was made in China.

According to Amazon, since there is a 145% tariff on China, that means that $18.37 of that price is me paying a tariff.

This is garbage. Not true. There is no way to know what I am paying in tariffs because that is decided by the vendor.

To understand tariffs, we need to understand the difference between cost and price.

Let’s assume I’m buying lots of widgets from a vendor in Canada. According to the US government, there is a 145% tariff on those goods coming into the US.

Using the Amazon system, if we would see this particular item on Amazon for around $0.99 with $0.59 of that being “tariffs”.

This particular widget cost $0.58 cents. This is the amount the Chinese seller gets per unit. It costs $0.01 to get it shipped over to Canada.

This puts the total cost to the vendor at $0.59. This includes any tariffs imposed by Canada or export costs imposed by China.

The customer is buying these widgets from the vendor for $0.80/unit.

Using the Amazon model, this would mean that the tariffs would be $0.47/unit. If this were the case, the vendor would make negative $0.12 per unit. This is not viable. Something else must be happening.

There is something else happening. That is, that the vendor first sells the widget at cost to himself in the United States.

This means that he is paying a tariff on his cost of the item. Which is $0.58 with a tariff of $0.85. This makes the breakeven point on this product $1.44

The vendor and the customer have negotiated how much each will pay of the tariff. They agree to split the tariff 50/50.

This means that the breakeven point is now $1.02, meaning that the vendor loses $0.22/unit. The cost to the customer is now $0.80 + $0.43 = $1.23.

The customer will lose $0.24 per unit sold on Amazon instead of the $0.19 he was making before the tariffs.

The reality is that this widget is listed on Amazon. The price is $2.83/unit.

The Canadian vendor is not going to eat any of the tariff costs, that will be passed on to the customer.

The customer’s cost will go from $0.80 to $1.66.

Your price will go from $2.83 to what?

It will likely stay at $2.83. Why?

Because if they could sell the product at $3.83 they would already be selling it at $3.83. It is that simple.

Will it go up a little? Maybe. What if it went up enough to cover the entire cost of the tariffs? That would take it to $3.69/unit. That is still a much smaller percentage than what Amazon and the media would have you believe.

Which brings us to reality, once again. The price of this item will probably go to $3.33 per unit. A cost increase of $0.50/unit.

This is the complexity of tariffs, much of the pricing calculations are done well outside the view of the final user.

At every stage, the price of the good is set at the maximum that the market will tolerate. If that means that profits go down, profits will go down. If profits go down too much, then that seller will go out of business.

Easter Egg Hunt.Basket of Easter eggs in green clover in the sun in spring garden.Catholic and Christian tradition. Finding and collecting colorful Easter eggs.Wicker basket with straw and Easter eggs in spring garden

The Great Easter Egg Hunt

This has been a tradition at our house for the last 12+ years. I was roped into doing the Easter Egg Hunt for my kids.

Easter Sunday, my wife tells me she’s going to be gone with the kids to church for a period of time, I’m to make an Easter egg hunt for the kids before they get home.

I did. Then played dumb when they came in asking about the eggs they could see. I think that was the year of the jelly bean rabbet poop.

Things became more elaborate over time. Once I remember clearly was the Easter where there was still snow on the ground. I used a sliding pitch to place eggs in places with no footprints. That cemented the belief that it was the Easter Bunny and not dad hiding the eggs.

By the time they were teens, the hunt had become something more. The first big hunt was about 100 eggs in the forest behind the house. This is not a “search to find eggs”, this is a challenge to find the next egg.

Each egg is carefully placed to be visible from the last egg found. Lose the track, you’ve lost the remaining eggs. In general, the eggs were placed in easy to see locations, IFF you were standing where the last egg was found.

Last year, there was a swarm of 9 teenagers on the hunt. My son bought a handful of cheap orange cones, to be able to mark found eggs so they could go back.

This hunt was different, there were written clues with either compass direction, distance, or both. This meant that they might not be able to see the next egg from the current egg.

Of course, they beat that. They used swarm tactics. The 9 of them just moved out in all directions, searching for the next egg.

3 hours to plant the eggs, 1.5 hours for them to complete the search.

Tonight I’m sore. I walked about 3 miles placing eggs. Then another mile or two while helping them get back on track. It took them over four hours to finish the hunt. And that was with a rescue from dad.

It appears that they lost the track, they attempted a swarm, picked up a part of the tail of the track, cleared those eggs, recovered the forward track.

What this meant was that when they got near the end, there were no eggs in sight to follow because they had already picked up those eggs.

From the egg count, they missed around 8 of the 100+ that were placed. There were a total of 201 eggs in the hunt.

10 went to a littles hunt for the 4yo across the street. The next 100 to 150 were hidden in the forest.

To give some idea, we located three eggs from last year when placing eggs this year.

The kids had another failure, I had placed 10 eggs on the ground, carefully laid out in an arrow pointing in the direction they needed to go. They got to the “cluster of eggs” and just picked them up.

The arrow was there because the next egg was not visible from the location of the arrow. Plus, that direction had a heavy thicket full of fallen trees. They should have had somebody maintain that point and sent others around the obstacle until they were in the right location.

I had fun, I’m sore, my legs hurt. I’m already planning next year.

Oh, I received permission to place booby-traps next year. This will be fun.

Is It AI Or Is It Real?

I noticed that we don’t see Garcia’s face clearly.  All the images are from the side.

There are some perspective issues when they are shaking hands.

Finally, they went from, “No, you can’t see him.” With the Senator getting stopped by the military 2 miles from the prison, to sitting and having drinks in a nice location.

This looks faked to me.  If not the images themselves, then in the setup.

The Sky Should Be Falling!

Just a short follow up. In one day the portfolio I am following recovered about 530%.

That is to say, the reported loss over the last 6 days has gone from 3.58% yesterday to 0.19% today.

Just stay the course and things will get better.

If you are invested in the market, don’t panic. As CBMTTek pointed out, February 2024 the S&P 500 was doing just fine, at the same level. The media wasn’t screaming about the economy tanking.

What is curious is the lack of panic in 2021/22 when the supply chain was in shambles. Ports were not moving products, ships were idling offshore, trains were not getting loaded at ports, etc… and the Secretary of Transportation was at home on maternity leave. Why no panic then?
— CBMTTek

He’s correct. The amount of panic the media projects is tempered by which party is in control.

A 0.001% drop in the market when Trump does something is cause to panic, which causes the sheep to sell, causing the market to drop. A 1.000% drop in the market when a Dem is in office creates a cricket like ambiance. And saying anything makes you a conspiracy theorist.

brown chicken eggs on the background of the eggshell

The Sky Is Falling!

Trump has put multiple tariffs into place. These tariffs cause changes in supply chains and in the costs to produce certain goods.

Every product produced requires raw goods, tooling, work space, and skills to create.

Consider a simple BLT. The raw goods are bacon, bacon, bacon, lettuce, tomato, bread, mayo. Having all of those raw goods does not a BLT make.

You have to have the correct tooling. The tooling here is a way of cooking the bacon, such as a grill top, cutting tomatoes, cutting bread, spreading the mayo.

Once the sandwich is produced, it has to be packaged for delivery. That requires still more raw goods.

When you sell that sandwich, you include the cost of the raw materials that go into it, you include the cost of the packaging, you include the cost of the tools, the building you used, and you include the cost of labor. You then need to include the cost the government imposes on you.

The cost of your raw goods includes the price you pay for the goods, the cost the government imposes on those goods, such as tariffs and VAT, and the cost of transporting the raw goods to your location.

Once you have all those costs, you add profit to come up with the price you will charge your customers.

Now, let’s change the product, instead of creating a sandwich, you are creating a gear. Your raw goods are iron and pattern making materials. You will use your tools to convert pattern making materials into patterns. You will then use those patterns to cast gear blanks. You will then turn those gear blanks into finished gears by applying different tools.

You have converted raw materials, with knowledge, skill and labor, into a finished product, a gear.

That gear is sold at a price which is profitable to you. That gear is likely a raw material for some other business.

Tariffs add to the cost of anything imported into a country that imposes imports. Imports are decided on the origin country or the country of manufacture.

Consider a car that is manufactured in Detroit. If that car includes raw materials that are imported from other countries, those materials that have tariffs applied will cost more.

There are no “complexities” to this. The “PANIC!” people want you to think there are, that’s not true. Every business keeps track of the cost of raw materials. If they don’t know the costs, they can’t set prices. It doesn’t matter if Ford, Canada produces the part or Ford, Flynt creates the part. There is a cost that is paid to have that part in the Ford, Detroit plant to put into a new car.

In a well-functioning business, they are always looking at the cost of raw materials. The cost of raw materials includes the cost of taxes (tariffs) and transportation.

It also includes the cost of bad materials. If you are paying a $1.00 for a widget and there is a 10% failure rate, that means you are paying $1.10 for each working part. If somebody else has the same widget with a cost (price + extra costs) of $1.05 and a failure rate of 0.1% that means they are only scrapping 1 in 1000 widgets.

In this case, it is actually cheaper to buy the “more expensive” widget.

Included in the cost calculations are longer-term issues. If the ball bearings you purchase are not properly heat treated, and you assemble them into a high-precision roller bearing which then fails in a million dollar engine, there is a heck of a lot more costs involved.

We know that people will change their purchasing habits when the cost of needed goods goes up. We saw this when Americans switched from steak to ground beef as their primary meat. Look at the CPI for food, you’ll see that in the past it had steak on it, today it has ground beef.

Because the cost of goods goes up, people will look for better prices. If that search leads to a local business, so much the better.

Unfortunately, local business might not be set up to cope with a large influx of new business. This leads to shortages.

In a market-driven economy, this leads to people consumers offering more or producers charging more. This is called a “signal”.

Because this signal exists, asking for more of that product, producers will attempt to create more product. This could be as simple as turning on an extra machine or as complex as standing up an entirely new production plant.

When this is going on, “the market” will respond. The market responds by buying or selling ownership in different companies. If a company that used to clear $2,000,000 per year is now projected to clear $4,000,000 per year is likely to attract buyers. A company that is seeing their income drop is likely to attract sellers.

This causes market fluctuations.

Over the course of yesterday, the portfolio that I follow was up as much as 1% yet closed down 0.82% Since Trump announced the tariffs, the portfolio has lost 3.53%

On $100,000 that’s a $3,530 loss.

And it is meaningless. That portfolio will go up again.

The people who are screaming the loudest are the people with millions in the stock market. If that are looking at a $10,000,000 portfolio, a 3.53% drop is $353,000 “loss”. That is more than a 1/4 million dollars in just a few days.

But it only becomes a loss if they sell now. If they hold on to those securities and the price recovers or goes up, then they will “make money”. But again, that is only true if they actually sell the security to realize the profits they made.

There is no reason to panic. The sky is not falling. If anything, this might be a good time to look at putting money into the market. The trick is to buy when near the bottom of the sell-off.

The only reason I know this, is I did some research this last week. I am NOT the person you want to take financial advise from.

On the wall…

There are five rifles on the wall. Four lever action and “Mrs. Pink”, an AR-15 platform with pink furniture. Don’t ask.

They are known as “Bear”, “Deer”, “Raccoon”, “Squirrel”, and “Mrs. Pink.”

Bear is a Henry Big Boy in 45-70. Deer is a Winchester model 94 in 30-30. Squirrel is a Henry Golden Boy in .22LR.

We do have bear around here, and I know that Bear has enough stopping power, with rapid follow-ups.

Deer has taken a couple of deer. She does a fine job with iron sights for me out to around 150 yards.

Squirrel isn’t used for squirrel hunting, but damn he’s fun to shoot.

That leave’s Raccoon. Raccoon is a Rossi R-95 in .357 Magnum. She eats .38 special just fine. She is a little loose where the stock attaches to the receiver, but she will put rounds on target out to 100 yards with no problem.

The lever action in .357 is a nice, mid-weight, rifle. I’ve used it for taken fat raccoon and opossums. One shot and they are down.

She is easy to reload for, and it is easy to police up all the brass. I cast hollow point bullets for her and have some commercial bullets for her as well.

All in all, she is a great rifle.

There is a matching wheel gun in .357 magnum. I don’t have enough time with that revolver. It is more than capable of putting rounds on target, I’m not. It doesn’t shoot like my Sig nor my 1911s.

Would I recommend an R-95 for a first-time gun buyer? No.

They don’t have a great reputation. The loading gate is nasty sharp, it needs a little care to get it to function easily. I found that finding ammo for it was a bit of a pain. With reloading, it is a joy.

Mrs. Pink as a red dot on her. She belongs to my wife. We run the manual of arms every so often, but I figure she has 30 rounds before she needs an assist to load the next magazine. But I know that those 30 rounds are going exactly where she wants them to go.

The iron sights on the four lever guns work fine for me today. I have another 30-30 that has a scope mounted on it. I need to spend a few dollars to replace the scope with something modern and then sight everything in.

All in all, those rifles make up the “go to” when needed now.

The other part of this are the LBV that are available for use. Each vest has 6 30 round mags of 5.56, at least 2 spare mags for the pistol that goes with the LBV, and a first aid kit.

Past Plans

When I was considering buying my first firearms, I was looking at “what happens if…” My thought process was based on the concept of availability of ammo after the fall.

That lead me to an AR-15 in 5.56, an AK type rifle in 7.62×39, a 9mm Glock, a bolt action in 7.62×51, a black powder revolver, and a black powder rifle.

The firearm I have the most fun with, to this day, are the AR’s. They are gentle on the shoulder, the ammo isn’t too expensive, they are easy to carry and are just plain fun.

Though I will note that they eat ammo rapidly. It isn’t an unusual range day when I won’t send 300+ rounds down range.

I still have .308 from the original ammo buy. I’ve augmented it with reloads, but I don’t feed much through that rifle.

Of course, once I started buying firearms, it hasn’t really stopped.

Regardless, as more than one person has said, when the SHTF, the best firearm is the one you have.

Young married couple husband and wife sitting at home having problems in their marriage and a cold relationship. A boyfriend and a girlfriend roommates have an argument about spending too much money

Sham Marriage

Immigration law in the United States is garbage. For many years, we did accept immigrants. Americans to be.

We were the melting pot. You came to the United States, proud of your original country, or hating it, then you work to become an American.

The stories of parents demanding that their children only speak English, to become even more American.

If you want to see a group of very proud people, just watch a group of immigrants become citizens. They work hard for that privilege.

But the Democrats had to ruin it. First, JFK signed the Community Mental Health Act. This is the act that closed mental institutions.

Yes, there were things wrong with mental health institutions. On the other hand, there are so many mentally ill people living on the streets.

But Teddy did worse. He pushed the Immigration and Nationality Act of 1965. This law abolished the discriminatory national origins quotas that favored immigrants from Northern and Western Europe.

In other words, he made a person from a third world shithole in Africa just as eligible as an Engineer from Germany. In addition, it pushed family-based immigrant visas.

The fallout from this could be anticipated, and was. Since immigration law favors family connections over what is best for the United States, family connections became much more valuable.

Before the Immigration and Nationality Act, if a couple wanted to come to the United States, both applied for visas and both worked towards becoming Citizens. Both were vetted and the needs of the United States were taken into account.

Afterward, we saw the concept of anchor immigrants. These were people who were admitted to the United States. Once established, they then sponsored other members of their family for visas.

Having a single immigrant become a citizen often leads to their spouse, their children, their parents all being granted visas. If any of those became citizens, they could sponsor even more relatives.

As more and more people applied to become citizens, the wait times started to go up. But there was a shortcut.

There are two methods of creating a family-connection. By birth, or by marriage.

Under current law, marrying a US Citizen will get you a visa, a green card, and a good start towards citizenship.

It became so common that laws were put in place to stop “sham-marriages”.

A sham-marriage is a marriage that exists only for the purpose of becoming a citizen.

How common are these sham-marriage? Common enough, that I knew of a woman who was taken advantage of by a middle eastern man.

But what are the odds of knowing two such women?

Yeah, it turns out that I know another woman that was taken in by a Muslim, once he had his citizenship, he divorced her, tried to take her kid, failed at taking the kids but was now an American Citizen.

Please leave a comment if you know anybody who was taken advantage of or who participated in a sham-marriage. I’m curious.

A handgun with bullets symbolizing gun rights while framed against the United States constitution.

Mel Gibson

What does this have to do with the Second Amendment?

It appears that Mel Gibson is a prohibited person.

If you read §922(g) closely, you will find that prohibited person includes people who have not been convicted of a felony nor any of the things we might consider reason to prohibit.

It gets better, under Rahimi, a person can only be prohibited temporarily and when found to be violent.

This means that many of the cases challenging the §922(g) sections are likely to win on the merits. The Range case for example. A non-violent felon. He pleaded guilty to fraud. He did not claim income from his lawn care side hustle when he was asking for financial help.

He served no time. It has been many years since Range pleaded guilty to this crime.

Oh, it wasn’t a felony when he pleaded guilty.

Over time, crimes that were not “felonies” under §922 have become felonies. I.e., if you can be jailed for the crime for more than a year, then it is a felony under §922, even if you serve no time.

Mel Gibson pleaded guilty to misdemeanor assault on his ex-girlfriend. He paid a $500 fine and put it behind him.

Turns out that this misdemeanor assault actually triggers §922(g) and he is now a prohibited person.

He has been attempting to get his Second Amendment protected rights back.

Pam Bondi?

A lawyer at the DoJ was fired. She ran to the New York Times to whimper about how unfair it was. About how she was the victim of the Evil Trump administration. She was doing the right thing.

What was she claiming to be the “right thing”? She claimed that disobeying her superiors was the right thing. In particular, she “couldn’t sign off” on a DoJ’s working group working to get gun rights restored to The People.

Yep. She mentioned that she was told to work to restore Mel Gibson’s rights and refused. She seems to feel that nobody should have gun rights, and that keeping as many people from having the right to keep and bear arms is the “right thing” to do.

Satisfaction survey with difference of salary income or benefit or promotion position concept. Wooden block with smile face standing on high coins stack more than low level coins stack with sad face.

I Expected More of You…

Years ago, I was in conversations with a lady, we agreed to meet for coffee and then a movie. When I arrived, she was busy with other people. I waited. When she was finally done with the others, I asked her which movie she was interested in seeing.

“I’ve decided I don’t want to go to a movie with you.”

My reply was, “I’m disappointed with you.”

I walked away. Later, I heard through the grapevine that my sentence had nearly broken her. “I’m disappointed” carries great weight, emotionally.

For years, I’ve felt like I’m in a political battle where the other side gets to decide what rules I fight by and what rules they fight by, but their rules are not the same as mine.

I remember every time somebody called me a murder for wanting to keep my guns. Every time I was blamed because some asshole killed children. I was to blame for the blood spilled in the cities.

If only I would consent to common-sense, reasonable gun laws. It is all about safety.

After Sandhook, I was hearing the same things again. One of the people doing it showed up on my Facebook page.

I proceeded to call her a heartless subhuman for wanting children to die. Why wouldn’t she agree that it was just common sense to have teachers armed to kill assholes that would harm our children? How could she be so selfish?

Every attack that had ever been leveled at me, I threw back at this lady.

Turns out that his lady was a friend’s aunt. They came to me and asked me to tone it down. To back off because I was being hurtful. She was a teacher and had spent her entire career helping children.

I did. I took the highroad, again.

This is where we always went.

When Trump v0.1 came on the scene, the Democrats loved him. They loved him because they knew he was a Democrat at heart. They wanted him to win the primary because he would be easier to beat than Hillary.

Trump v0.9 showed up when he became the Republican candidate for President. The Democrats turned on him like a pack of hyenas.

Trump v1.0 started when he took office the first time.

One of the reasons he won that time was because he was fighting back. He was calling the left out for their lies. But he used belittling terms for them. He fought from the gutter where the left lives.

Ally was so upset about his words that she couldn’t accept his deeds. Almost every interaction regarding Trump was her telling me about something he said that was mean.

She was still part of that leftist mindset. That mindset that looks for a reason to throw a person out of the tent. If a person is in perfect lockstep with the sheep of the left, then they are kicked out.

Every conservative was unacceptable to her because they had done something that disqualified them.

She has come around. But some of those old habits die hard.

We got into a big argument after a Republican representative introduced the mentally ill representative as “The representative of ??? Mr. ???” sorry, I don’t recall the names.

When I was talking at dinner, I mentioned this and mentioned that I got a chuckle over this.

She was very upset with me. “I expect better of you.”

From her perspective, I was being mean to that ill person. It would have been easy for the Republican to introduce the other member as “Representative X”. No Mr. No Mrs. No Miss. Just “Representative”.

Yeah, she could have. But I was pleased to have her punch back.

But everything she observes from her new group gets that same, “I expect better of my team” treatment.

I read Alito’s dissent. It didn’t pull any punches. Thomas joined him in his dissent. When those two are in agreement, then the right thing to do is what they are saying.

Barrette didn’t agree with them. She voted with the majority to deny a stay pending appeal.

Having mulled over it for a few days, I have to agree with Amy. And it is one of the reasons why she is a good choice for the Court.

I do not want somebody who votes the “right” way on my issues. I want somebody who respects the law and follows the constitution, regardless of where it leads.

I am sure that it was hard for her to withstand the powerhouse that is the Thomas-Alito team.

The short of it was that Roberts made the issue moot. This saved everybody time. It kept the status quo for a bit longer. And it put the case on the correct footing for an appeal of the preliminary injunction. In addition, even the denial was a win because it slapped the inferior courts square in the face with their rogue behavior.

I expect more of my justices. Amy gave me more. It hurt, to be sure, but she did the right thing.

When I see Trump 2028 I know it is not going to happen. The push for allowing a president to have three terms happened near the end of the Obama presidency. The left wanted their chosen one to have another term.

I didn’t like the idea then, I don’t like the idea now.

Because I don’t see any real push to get Trump a third term, I know that Trump 2028 is a troll. It is a good troll because the left can’t treat it as a joke. They can’t because they were serious when they were trying to get Obama a third term.

When I see “Trump 2028” posted on the idiot signs held by Democrats during the address to the joint session of Congress, it makes me smile even more.

It trolls on so many levels, and it makes me chuckle. It isn’t being pushed by anybody seriously. J.D. 2028 is what I’m actually hearing. The serious faces of the people holding idiot signs makes it work more. The fact that if it happened, the Democrats would have an even bigger meltdown. There would be accusations all over the place.

And not a single Democrat would admit that they had seriously looked into it for their guy, for Obama.

As a practical matter, getting a third term for a president requires a Constitutional amendment. If somebody were to propose one, I would be on the phone to my Senators and Representative to tell them to vote against the amendment.

Until that happens, this is a great troll. I’m not going to let realities get in the way of good humor.

As many have said, the left can’t meme.