What will the Trade tariff on Chinese made products mean for the golf industry

annsguy · May 10, 2019

I am not sure what items in the golf industry would fall under the 25% trade tariff the President has just placed on Chinese producted goods. My assumption is that most golf clubs and balls touch China in some way. Footwear as well. Along with a ton of apparel. Curious if anyone has any insight on this.

NTXNoodler · May 10, 2019

Ya I am curious to see how it affects things. I haven't been keeping up a ton but it's just China right? My first thought was Mizuno clubs but they are Japanese I believe.....

The biggest thing I think will be clothes and accessories that you feel it potentially.

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annsguy · May 10, 2019

I just read that golf bags are on the list but havent seen the whole list yet.

darthweasel · May 10, 2019

helpful hint from Helouise: A tariff is a hidden tax on consumers. When it affects the cost of stuff coming into the country, people in the country don't just keep their prices the same, they raise them to the new floor. If everything is source-able at like price not so, but if you raise the costs of whoever is most affordable, everyone else tends to raise theirs. So there is a non-zero chance it doesn't affect just Chinese brands.

pumbaa · May 10, 2019

drivers will be $600 now!

weemohack · May 10, 2019

this is an additional 15%.....10% already was in effect. I work in the flooring industry and this is always a nightmare. I am 100% for American made BUT.....it's idiotic to think "China" is paying this tariff. The American consumer will be paying this.....period

JB · May 10, 2019

darthweasel said:
helpful hint from Helouise: A tariff is a hidden tax on consumers. When it affects the cost of stuff coming into the country, people in the country don't just keep their prices the same, they raise them to the new floor. If everything is source-able at like price not so, but if you raise the costs of whoever is most affordable, everyone else tends to raise theirs. So there is a non-zero chance it doesn't affect just Chinese brands.

To be fair that is any cost. Raise in wages such as minimum wage hikes, cost of materials, etc.

When costs rise, regardless of reason, it must be passed on.

DataDude · May 10, 2019

I think it has already affected iron prices. The steel involved has really increased in price the last few years. Single iron prices have gone from $100-$120 to $150-$200 in just a couple of years.

TXGolfr · May 10, 2019

JB said:
To be fair that is any cost. Raise in wages such as minimum wage hikes, cost of materials, etc.

When costs rise, regardless of reason, it must be passed on.

Yes! I’m definitely in favor of free trade, but to think chasing the cheapest labor available is a perfect solution is pretty silly.

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darthweasel · May 10, 2019

JB said:
To be fair that is any cost. Raise in wages such as minimum wage hikes, cost of materials, etc.

When costs rise, regardless of reason, it must be passed on.

I do not disagree in the least. Here in Oregon it is popular to cry, "thus and such a corporate entity is not paying y amount of taxes".

Every time I see that I know I have met someone who cannot do basic math and doesn't understand how the world functions. No company ever has paid a penny in tax. As you mention, it is part of the cost and they pass that on to the consumer. Ironically, often a tax increase benefits companies...lets say they are making something that costs a dollar and want to make 10% they sell for 1.10. But we add 10% tax, now their cost is 1.10, they still want 10% so they add...11 cents. is 11 more than 10? Obviously a simplification but it is a demonstration of what happens.

Worse, the min wage raises tend to really harm the low middle income or high low wage people. Cost of staples goes up...milk, bread, gas...but they don't get the same wage bump. Or to be more fair with many of my friends...the dollar menu becomes the 1.25 menu...

in the end, it is always the consumer who pays. Tax increase, minimum wage, tariff, "fee assessment"...that money has to come from somewhere.

JB · May 10, 2019

darthweasel said:
I do not disagree in the least. Here in Oregon it is popular to cry, "thus and such a corporate entity is not paying y amount of taxes".

Every time I see that I know I have met someone who cannot do basic math and doesn't understand how the world functions. No company ever has paid a penny in tax. As you mention, it is part of the cost and they pass that on to the consumer. Ironically, often a tax increase benefits companies...lets say they are making something that costs a dollar and want to make 10% they sell for 1.10. But we add 10% tax, now their cost is 1.10, they still want 10% so they add...11 cents. is 11 more than 10? Obviously a simplification but it is a demonstration of what happens.

Worse, the min wage raises tend to really harm the low middle income or high low wage people. Cost of staples goes up...milk, bread, gas...but they don't get the same wage bump. Or to be more fair with many of my friends...the dollar menu becomes the 1.25 menu...

in the end, it is always the consumer who pays. Tax increase, minimum wage, tariff, "fee assessment"...that money has to come from somewhere.

Actually no, that’s not true. Only companies that sell products can pass that bill on to consumers.

Millions of companies eat those costs just like the public does. As a small business owner, I’d love it to be different, but sadly it doesn’t work that way.

darthweasel · May 10, 2019

JB said:
Actually no, that’s not true. Only companies that sell products can pass that bill on to consumers.

Millions of companies eat those costs just like the public does. As a small business owner, I’d love it to be different, but sadly it doesn’t work that way.

partial concur, I get what you are saying about Sales, but at some level, every business is sales at some point, even if a different term. Money has to exchange hands for a business to function, even if the form is not money itself. Value has to exchange, lets say that...but for example, my Dad in his day and me in mine as landlord, Dad as a small truck fleet operator (2), the distribution company I worked for...I am leaving out the sales businesses...all included taxes as part of their cost. Running on margins of from 3-23%, a tax of "just 2% as one was pitched caused an increase in our prices...my wife and I kept our rent cost steady to our renters for 8 years. The day a tax increase was voted, it went up. The day the cost of a business license went up...it increased. When they passed a law we are on the hook for their first, last and deposit if we evict them...it increased. Have to cover our costs.

Dad did the same with trucking. Tax on fuel increased? charge per mile went up. Just the cost of doing business. If I went into the various other businesses I know people have owned...from painting services to print shops to fast food to retail lumber to wholesale broker to exotic dancer...every time taxes went up, so did the money transferring hands. Hard to make it work otherwise. or for that matter, minimum wage...I recall when it skyrocketed from 2.85 to 3.15 (yep, just dated myself) when I was working at a small local fast food chain. I was less able to afford eating there because their prices increase by just enough to keep their margin. Which turned out to be more than I was seeing because it moved me into a higher tax bracket. I actually made less with a wage increase but made up for it by being able to afford less. That stung. Happily, not an issue for me these days.

But reminiscing about that job, take the oft-repeated claim that restaurant margins range from 3-5%. The ones that eat the tax increase are the ones that pull the TGIF Friday or Portland City Grill maneuver...people coming in for their shift only to find the doors chained shut and find out they are closed. I was a shift manager at a later point in my career there and part of my job was checking sales dollars per hours and sending people home if we were below a certain margin...the prices were set, so we had to adjust costs.

Small business is tough because there are no bailouts, no golden parachutes. Whether sales, service, manufacturing, unless someone is running as a charity they had best be including all costs and making enough to cover them, small, medium or large business. See Roebuck, Sears or Penneys, JC for how it works when they don't.

That is part of what made the recent softwoods lumber agreement expiration suck. A lot of builders had quoted stuff previously, and when the tariffs went in, the new floor on lumber prices was 20% higher because the people here in country, many of whom have both Canadian and US mills hilariously, automatically saw the new "competitive number" was 20% higher. They had to adjust for costs.

Every time we get a local bond or fee or tax...that money still has to come from somewhere. We all want it to be the other guy which is why sticking big business or the sin tax if I happen to not smoke or drink or...whoever the "other" is we want to stick with the bill. Wish we could.

JB · May 10, 2019

darthweasel said:
partial concur, I get what you are saying about Sales, but at some level, every business is sales at some point, even if a different term. Money has to exchange hands for a business to function, even if the form is not money itself. Value has to exchange, lets say that...but for example, my Dad in his day and me in mine as landlord, Dad as a small truck fleet operator (2), the distribution company I worked for...I am leaving out the sales businesses...all included taxes as part of their cost. Running on margins of from 3-23%, a tax of "just 2% as one was pitched caused an increase in our prices...my wife and I kept our rent cost steady to our renters for 8 years. The day a tax increase was voted, it went up. The day the cost of a business license went up...it increased. When they passed a law we are on the hook for their first, last and deposit if we evict them...it increased. Have to cover our costs.

Dad did the same with trucking. Tax on fuel increased? charge per mile went up. Just the cost of doing business. If I went into the various other businesses I know people have owned...from painting services to print shops to fast food to retail lumber to wholesale broker to exotic dancer...every time taxes went up, so did the money transferring hands. Hard to make it work otherwise. or for that matter, minimum wage...I recall when it skyrocketed from 2.85 to 3.15 (yep, just dated myself) when I was working at a small local fast food chain. I was less able to afford eating there because their prices increase by just enough to keep their margin. Which turned out to be more than I was seeing because it moved me into a higher tax bracket. I actually made less with a wage increase but made up for it by being able to afford less. That stung. Happily, not an issue for me these days.

But reminiscing about that job, take the oft-repeated claim that restaurant margins range from 3-5%. The ones that eat the tax increase are the ones that pull the TGIF Friday or Portland City Grill maneuver...people coming in for their shift only to find the doors chained shut and find out they are closed. I was a shift manager at a later point in my career there and part of my job was checking sales dollars per hours and sending people home if we were below a certain margin...the prices were set, so we had to adjust costs.

Small business is tough because there are no bailouts, no golden parachutes. Whether sales, service, manufacturing, unless someone is running as a charity they had best be including all costs and making enough to cover them, small, medium or large business. See Roebuck, Sears or Penneys, JC for how it works when they don't.

That is part of what made the recent softwoods lumber agreement expiration suck. A lot of builders had quoted stuff previously, and when the tariffs went in, the new floor on lumber prices was 20% higher because the people here in country, many of whom have both Canadian and US mills hilariously, automatically saw the new "competitive number" was 20% higher. They had to adjust for costs.

Every time we get a local bond or fee or tax...that money still has to come from somewhere. We all want it to be the other guy which is why sticking big business or the sin tax if I happen to not smoke or drink or...whoever the "other" is we want to stick with the bill. Wish we could.

You are using an example where more costs were sent to others. Gas went up, mileage charge went up.
Not all businesses are run like that. Not all Consulting firms cannot all of the sudden raise prices because of taxes. To use an example, travel costs go up in our business. We don't charge more for THP Events. Instead we eat that cost. Shipping costs go up to our writers (double), we don't charge more for advertising or Albatross Club. We eat those costs.

Its not black and white that companies don't pay taxes, just because some are able to pass those costs to others.

sposey013168 · May 10, 2019

darthweasel said:
partial concur, I get what you are saying about Sales, but at some level, every business is sales at some point, even if a different term. Money has to exchange hands for a business to function, even if the form is not money itself. Value has to exchange, lets say that...but for example, my Dad in his day and me in mine as landlord, Dad as a small truck fleet operator (2), the distribution company I worked for...I am leaving out the sales businesses...all included taxes as part of their cost. Running on margins of from 3-23%, a tax of "just 2% as one was pitched caused an increase in our prices...my wife and I kept our rent cost steady to our renters for 8 years. The day a tax increase was voted, it went up. The day the cost of a business license went up...it increased. When they passed a law we are on the hook for their first, last and deposit if we evict them...it increased. Have to cover our costs.

Dad did the same with trucking. Tax on fuel increased? charge per mile went up. Just the cost of doing business. If I went into the various other businesses I know people have owned...from painting services to print shops to fast food to retail lumber to wholesale broker to exotic dancer...every time taxes went up, so did the money transferring hands. Hard to make it work otherwise. or for that matter, minimum wage...I recall when it skyrocketed from 2.85 to 3.15 (yep, just dated myself) when I was working at a small local fast food chain. I was less able to afford eating there because their prices increase by just enough to keep their margin. Which turned out to be more than I was seeing because it moved me into a higher tax bracket. I actually made less with a wage increase but made up for it by being able to afford less. That stung. Happily, not an issue for me these days.

But reminiscing about that job, take the oft-repeated claim that restaurant margins range from 3-5%. The ones that eat the tax increase are the ones that pull the TGIF Friday or Portland City Grill maneuver...people coming in for their shift only to find the doors chained shut and find out they are closed. I was a shift manager at a later point in my career there and part of my job was checking sales dollars per hours and sending people home if we were below a certain margin...the prices were set, so we had to adjust costs.

Small business is tough because there are no bailouts, no golden parachutes. Whether sales, service, manufacturing, unless someone is running as a charity they had best be including all costs and making enough to cover them, small, medium or large business. See Roebuck, Sears or Penneys, JC for how it works when they don't.

That is part of what made the recent softwoods lumber agreement expiration suck. A lot of builders had quoted stuff previously, and when the tariffs went in, the new floor on lumber prices was 20% higher because the people here in country, many of whom have both Canadian and US mills hilariously, automatically saw the new "competitive number" was 20% higher. They had to adjust for costs.

Every time we get a local bond or fee or tax...that money still has to come from somewhere. We all want it to be the other guy which is why sticking big business or the sin tax if I happen to not smoke or drink or...whoever the "other" is we want to stick with the bill. Wish we could.

Just replying to your part about trucking, you are not correct sir. Fuel taxes have went up 150 percent more that freight rates.

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ohthehumanity · May 12, 2019

pumbaa said:
drivers will be $600 now!

$699 in Canada before the new tariffs

DataDude · May 12, 2019

Companies are hurt too because at $550 for a driver there are less people willing to buy then at $500. So they have to discount unsold products, make less to begin with, or eat the tariff.

zooropa · May 12, 2019

Apparently trade wars are good and easy to win.

darthweasel · May 13, 2019

JB said:
You are using an example where more costs were sent to others. Gas went up, mileage charge went up.
Not all businesses are run like that. Not all Consulting firms cannot all of the sudden raise prices because of taxes. To use an example, travel costs go up in our business. We don't charge more for THP Events. Instead we eat that cost. Shipping costs go up to our writers (double), we don't charge more for advertising or Albatross Club. We eat those costs.

Its not black and white that companies don't pay taxes, just because some are able to pass those costs to others.

fair point. An exception rather than the rule...and if it continues, these companies have to find the margin elsewhere. In my experience most businesses have cost models that account for an aggregation of costs and a desired margin. Anything that affects the costs is taken into account and affects the sell of the good or service. Good to know there are exceptions.

darthweasel · May 13, 2019

sposey013168 said:
Just replying to your part about trucking, you are not correct sir. Fuel taxes have went up 150 percent more that freight rates.

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if you are going to correct someone...it behooves you to be right. Instead, you went with a solid strawman, well played. Not sure if you know this or not...but fuel costs are not the only cost in trucking. Far from it. Meanwhile, when the recent industry regs on log books went to electronic, some rates more than doubled, some went up more like 30-70% in various parts of the country. Almost as if the hours changes were just part of the picture...and depending on if it was a hot shot or cross country rates, it was a bigger factor. Weird. Almost as if fuel taxes and prices are 1 factor of many. Almost as if in the lumber industry the softwoods agreement was one facto of many. And so forth.

JB · May 13, 2019

darthweasel said:
fair point. An exception rather than the rule...and if it continues, these companies have to find the margin elsewhere. In my experience most businesses have cost models that account for an aggregation of costs and a desired margin. Anything that affects the costs is taken into account and affects the sell of the good or service. Good to know there are exceptions.

Its really not an exception though.. Finding ways to save money to maximize their own dollars, whether it be through deduction, reimbursement, coupons or anything else. Everybody in work force works to minimize their costs to have more. Be it company, consumer or anything else.

sposey013168 · May 13, 2019

darthweasel said:
if you are going to correct someone...it behooves you to be right. Instead, you went with a solid strawman, well played. Not sure if you know this or not...but fuel costs are not the only cost in trucking. Far from it. Meanwhile, when the recent industry regs on log books went to electronic, some rates more than doubled, some went up more like 30-70% in various parts of the country. Almost as if the hours changes were just part of the picture...and depending on if it was a hot shot or cross country rates, it was a bigger factor. Weird. Almost as if fuel taxes and prices are 1 factor of many. Almost as if in the lumber industry the softwoods agreement was one facto of many. And so forth.

Not correct again although I wish you were. ELD mandate went into effect December 2017, spot rates did spike about 30 percent for the first quarter of 2018 but now they are back to normal. ABOR users are still good until December of 2019, then everyone has to be ELD compliant, you will see another spike in spot rates and they should stay up this time.
But back to the fuel taxes, it is a fact fuel taxes have went up more than rates as have all other costs.
Yes I know every cost associated with trucking I have owned a trucking company for 25 years.

But perhaps you should share all your knowledge of trucking with me, I am all ears

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-CJ- · May 13, 2019

All companies are trying to hit a certain Operating Income regardless of what the margin is at standard costs.

1. If you are in a competitive market with your widgets, with well advertised selling prices, you will not be able to pass the increase on to the consumer. These cuts to cover the increased cost will be below standard margin, think mostly Capital Expenditures, then Headcount, then Fringe Benefits.

2. If you are in a specialized market, specialized pricing, the consumer will feel the brunt of the increased costs.

3. If you are a small business, you're F'ed! You have to balance low inventory and not give your customer a reason to search for a different store/vendor. You as a small business rarely have the option to pass increased costs right away to the consumer, those that do will be gone in a few years or a shell of themselves down the road. Small businesses end up just dealing with a smaller operating profit, if they can, and slowly raise selling prices, but never really get back to the same level.

A Tariff is just backfire economics. In the end we all lose.

JB · May 13, 2019

-CJ- said:
All companies are trying to hit a certain Operating Income regardless of what the margin is at standard costs.

1. If you are in a competitive market with your widgets, with well advertised selling prices, you will not be able to pass the increase on to the consumer. These cuts to cover the increased cost will be below standard margin, think mostly Capital Expenditures, then Headcount, then Fringe Benefits.

2. If you are in a specialized market, specialized pricing, the consumer will feel the brunt of the increased costs.

3. If you are a small business, you're F'ed! You have to balance low inventory and not give your customer a reason to search for a different store/vendor. You as a small business rarely have the option to pass increased costs right away to the consumer, those that do will be gone in a few years or a shell of themselves down the road. Small businesses end up just dealing with a smaller operating profit, if they can, and slowly raise selling prices, but never really get back to the same level.

A Tariff is just backfire economics. In the end we all lose.

Not completely. There are thousands of small businesses that are less impacted by this for instance than the healthcare “tax” that had been in effect 8 years ago.

fuffle master · May 13, 2019

JB said:
Actually no, that’s not true. Only companies that sell products can pass that bill on to consumers.

Millions of companies eat those costs just like the public does. As a small business owner, I’d love it to be different, but sadly it doesn’t work that way.

This is 100% true. I own a sales business of a product that I can't control the cost of, so more of a service and not a product business. So, if Min wage increases to say 15 and the people I pay 12 need to be increased as well, then I can't pass that cost on to others. I would be forced to eat the cost myself or let people go.

-CJ- · May 13, 2019

JB said:
Not completely. There are thousands of small businesses that are less impacted by this for instance than the healthcare “tax” that had been in effect 8 years ago.

Correct. I should have stated in my comment "increased cost specific to the industry". As a tariff on import eggs would only have a direct affect to the industry that has eggs in its bill of materials.

But even though, a Tariff, regardless of industry will indirectly hit us ALL in the pocket and have an impact everywhere.