Price sensitivity

The goal of President Trump’s tariffs threat is to bring manufacturing back to America, right? The downside of course is that things will become more expensive. Manufacturing didn’t leave America because of some evil corporate plan. The simple reality is that labor is cheaper elsewhere. Lowering cost of goods sold is a big lever to increase profits. Or have profits in the first place.

Tariffs are merely tacking those labor savings back onto the purchase price. There’s one for sure loser, and it’s the consumer.

For sure there are plenty of cheap crap coming out of China. But in the year 2025 it’s beyond pass time to acknowledge that China can also produce things of the highest quality. Did we forget the iPhone has been made in China since inception? The Apple smartphone is as precise a device as it gets.

“Made in the U.S.A.” still denotes a higher quality in people’s minds. Whether or not it’s actually true is up for debate. What is definitely true is that it’ll cost more compared to foreign-sourced manufacturers. I recently bought a barbell, and the unit made with American steel is $85 dearer than the Chinese-made equivalent from another company. The decision was easy.

Coming out of the high inflationary period of the pandemic, I am always looking for the best deals on anything. And doesn’t everybody? Who has the money to boycott Amazon (because big bad Bezos)? If a particular item is the cheapest on Amazon, I am buying it there. I do not have the income to support an artisan soap business at a farmer’s market. If you do, please go ahead.

I will live life as cheaply as possible, because everything else has gone up in price. Tariffs - if they come to full fruition - is only going to make it worse.

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Spring layering.

Let him cook

President Trump has enacted tariffs on imports from Canada, Mexico, and China. Begun, the trade wars have. For what reason, it’s not immediately clear. For the general public, the salient thing is prices will be going up. If you’re looking to buy a car this year, pray that it isn’t manufactured in Canada or Mexico! You really think automakers are going to eat that tariff costs entirely?

The best thing to do right now is to let Trump cook (as the kids say these days). Whatever he’s got planned, be it Project 2025 or whatever, let him execute. The good ideas will work, and the bad ideas won’t. You have to allow people to directly feel the consequences. Otherwise the lesson never gets learned. I wonder how Trump-voting Federal employees are dealing with the freezes and return-to-office mandate. Your vote, your consequences…

What’s disgusting to see is people appealing to Democrats to do something. First of all, it’s extremely pointless to badger the minority party. Secondly, the party that has been pilloried for their empathy (the path to DEI is paved with very good empathic intentions) can’t then be asked to utilize that same empathy to save you. It’s like the woman who rejects the nice guy but yet wants the supportive benefits the nice guy provides.

You cannot have it both ways. Democrats ought to turn off their empathy muscles for the time being. They should not let their tendency to want to limit harm be used to save the same people that rejected it. Like the nice guy that refuses to leave, at some point you’re just allowing yourself to be abused.

I’m for letting winning Presidents to implement their agenda. The market (read: U.S. population) will determine whether they are good or bad. High inflation knocked out Biden/Harris; if Trump - due to the tariffs - causes another high inflation period, the Republican Party will surely be in a precarious position in the next election cycle.

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Not once, but.

Unconsumed holidays

Word on the street is that with the supposed Trump tariffs looming on goods made in China, people should buy what they need now to save a buck or two. If you’ve been eyeing a dishwasher upgrade and the thing is Chinese made, time to buy yourself a Christmas present.

Anecdotally, sales representatives have warned us at work to put in big orders now, should the tariffs come into fruition, and suddenly that batch of laptops is now 20% dearer in price. I’m sure the representative has an incentive to sell as much as possible before the end of the year for that bonus. That said, our university is not exactly loaded with cash, so any savings on bulk purchases is not nothing.

Maybe Trump is playing 4D chess: threatens tariffs, inadvertently causes the biggest holiday buying season of all time.

It may be the most wonderful time of the year in terms of weather and atmosphere, but the blatant and rampant consumerism of the holidays is kind of disgusting. The combination of Black Friday and present shopping is both a financial burden and environmentally unfriendly. The endless shipping boxes and the energy it takes to get them to customers.

I’m glad my friend group do not have holiday gifting culture. And even if we did, I’d buy everybody stuff they’d actually use. Like toilet paper, or a pack of USDA Prime beef. The last thing I need more of are items that just sits on a shelf to look nice. It would go straight to the trash bin if and when I ever move home again.

Good news: I saved 100% by buying nothing!

Take me out.

Trump threatens Germany with car tariffs

People in the car forums I frequent are up in arms about President Trump potentially slapping a 20% tariff on German-made vehicles. Rightfully so because who would want to pay 20% more on already expensive German cars. Though I think if tariffs were enacted the situation won’t be that simple. 

Contrary to popular conjecture, people who can afford luxury vehicles are highly price sensitive. They haggle just the same as buyers of Toyota Camrys. Even the super rich would setup LLCs in Montana, register their vehicles under the company to avoid paying hefty license fees in their home State. Bottom line is that nobody wants to pay a penny more for a car than absolute necessary. 

Therefore if Trump imposes the 20% tariff, automakers like Mercedes, Audi, and BMW aren’t going to suddenly raise the MSRP of their cars by equal measure - doing so would crater sales (simple price elasticity). Not only will higher prices be a deterrent, but consumers know that it’s because of tariffs so one they aren’t going to pay extra for the President’s stupid trade-war and two they will simply wait it out until the two sides come to an agreement. 

I think the manufactures will raise the prices a bit just below what people are sensitive to, and then eat the rest of the costs for the time being - they’ve certainly made enough profits from selling SUVs the last few years to cover. Nevertheless it’s going to negatively affect the bottom line and the German government will be lobbied heavily to mediate. 

One thing is for sure: more people aren’t going to start buying Cadillac or Lincoln. 

A certified G, and a bona fide stud.