An example of US tariffs on Chinese goods at play
An article in Bloomberg showed a nice calculation on the new US reciprocal tariffs on products made in China. The Bloomberg example assumed a more than 100% wholesaler and retailer margin. The average wholesaler and retailer margins in US are about 50~60%. I assumed 50% margins in my calculation.
Product = Car mats manufactured in China
Free on board (FOB) price = $6
Add: Customs duty @ 5.3% = $0.3
Add: Section 301 duty @ 25% = $1.5
Add: Fentanyl tariff @ 20% = $1.2
Add: Reciprocal tariff @ 125% = $7.5
Add: Freight = $1
Landed cost in US = $17.5
Add: Wholesale margin @ 50% = $8.75
Wholesale price = $26.25
Add: Retail margin @ 50% = $13.125
Retail price = $39.37
Pricing before the tariffs were imposed
Free on board (FOB) price = $6
Add: Customs duty @ 5.3% = $0.3
Add: Section 301 duty @ 25% = $1.5
Add: Fentanyl tariff @ 20% = $1.2
Add: Freight = $1
Landed cost in US = $10
Add: Wholesale margin @ 50% = $5
Wholesale price = $15
Add: Retail margin @ 50% = $7.5
Retail price = $22.5
Price before tariffs = $22.5
Price after tariffs = $39.37
Increase in price = $16.87
Note: Section 301 duties are additional import duties imposed by the US on certain products to address unfair trade practices.