Tariffs and Film and Paper prices

[Don_ih]

Frankly, I think Americans should be more worried about procuring enough softwood lumber at a reasonable price to supply all their construction needs. They do not get enough domestically. It's a bit more pressing than photo paper.

 

[GregY]

No disagreement. What I have in mind are autos, appliances, home repairs. Sometimes these fail unexpectedly and need replacement without delay. But lots of small impacts can add up quickly.

Agreed....& paper is already expensive. As a professional the client base shrinks when you price a mounted print at $1000 (+/-) when the cost of a box of paper alone is $750+ USD....

 

[Alan Edward Klein]

It is possible that I have missed or overlooked it, but I have not seen anything yet about tariffs that would affect photographic film and paper. There have, so far, not been any across-the-board tariffs imposed by the United States on materials or goods from Great Britain, Europe, or Japan.

The tariffs in place or coming into effect soon are on steel, aluminum, and imported automobiles and components. There is some discussion on expanding tariffs to lumber, copper, semiconductors, pharmaceuticals, and agricultural products.

But if Great Britain or Europe decide to respond by adding VAT on exports, then that could potentially affect prices.

Adding a VAT or tax on exports would reduce European export sales. Why would Europe do that?

 

[Alan Edward Klein]

That was exactly my point. Alaris is busting EK's b***, of a $20 Ektar roll EK is not getting even close to $10. Not even close. So a dollar of increase in production (at worse - if EK is importing all of the ingredients and have to pay their people more because tariffs will bring inflation to US) is not so horrible. If demand for film would be so weak that sales would drop if Alaris tried to pass all the tariffs to the consumers, Alaris has more than a healthy cushion to eat all or some of the price increase.



A what?!

How do you know what Alaris markups are?

 

[Alan Edward Klein]

Tariffs between Great Britain and the US may not last long anyway. Britain, alone since Brexit, is in the position to make trade deals with the US more easily than the EU which encompasses so many nations.

 

[Alex Benjamin]

Tariffs between Great Britain and the US may not last long anyway. Britain, alone since Brexit, is in the position to make trade deals with the US more easily than the EU which encompasses so many nations.

Problem is these tariff do not depend on the hability of such or such country to build trading partnerships with the US. They are totally dependent on the whims and fancy of the person implementing them. There's no logic to any of this.

(Tried very hard NOT to make this political)

 

[mshchem]

As long as we (USA) can get dope in and guns out everything will be fine.

All (almost) US Mint gold coins that are so popular are made using gold imported from Canada .

I'm still willing to meet near Grand Marais Minnesota, BWCA trail somewhere. I'll bring a crap load of film to trade for plywood. (and maybe a new Ford pickup)

So sad that this is even a thing, that we are even talking about such horse crap.

 

[mshchem]

Problem is these tariff do not depend on the hability of such or such country to build trading partnerships with the US. They are totally dependent on the whims and fancy of the person implementing them. There's no logic to any of this.

(Tried very hard NOT to make this political)

Agreed and logic isn't political, it's logic!

 

[GregY]

That was exactly my point. Alaris is busting EK's b***, of a $20 Ektar roll EK is not getting even close to $10. Not even close. So a dollar of increase in production (at worse - if EK is importing all of the ingredients and have to pay their people more because tariffs will bring inflation to US) is not so horrible. If demand for film would be so weak that sales would drop if Alaris tried to pass all the tariffs to the consumers, Alaris has more than a healthy cushion to eat all or some of the price increase.



A what?!

Why would Alaris choose to eat the tariff?

 

[brbo]

Why would Alaris choose to eat the tariff?

Somebody has to. I hope we agree on this, because If you're in the "here are our beautiful tariffs and they are paying for them" camp, there is little to discuss.

Now, if we agree that somebody will pay the tariffs on input materials that go into film there is either Alaris or the consumer that will eat the tariffs (EK will incorporate them into the price that they sell film to Alaris). Now, lets make an assumption that there is such a price beyond which consumers lower their purchases of a product. If lower sold quantities multiplied by Alaris' markup are lower than quantities sold at previous price multiplied by Alaris' markup minus tariffs, then it's in Alaris' interest to absorb at least some of the tariffs. If Alaris can pass the entire increase onto consumers film prices are not high enough, so we all better stop complaining.

 

[koraks]

Any tariffs will ultimately be 'eaten' by the end user. It ain't rocket science. At worst, this can put companies out of business.

 

[brbo]

Any tariffs will ultimately be 'eaten' by the end user. It ain't rocket science. At worst, this can put companies out of business.

That is a very simplistic view on the matter. Even the most basic economic theory of perfect competition on the supply side and perfect consumer information on the demand side will mention that it will depend on the price elasticity and depending on that it could go from consumers or producers absorbing ALL of the tariffs or anything in between in the short run. Price elasticity can change (longer term), supply side as well (technological advancement). And there is no reason to believe that film market is anywhere close to what is described as perfectly functioning market in textbooks with plenty of supply side competition, product substitution, etc.

 

[ChrisGalway]

Another aspect of this for US-based people is that you simply do not have customs arrangements set up for "small" imports, such as when you order an item from outside the US. At present, no import taxes are collected on small items (less than $800 I believe) because the customs systems/people to actually collect this are not implemented. Many other countries have had this set up for years ... and it still does not run smoothly!

Collecting the tax on a $20 item adds both delay to the delivery, and cost. Welcome to the club!

 

[koraks]

Even the most basic economic theory

Yup. I'll not say what I think of economic theory. It would not be particularly nice.
Fact of the matter is that for any given supply chain, money comes from the end and materials come from the start, and they move in opposite directions. That's as fundamental as, say, gravity or magnetism. Another pretty solid ground rule is that any link in the chain will attempt to offload risk, and it tends to accumulate at the point of the least bargaining power. In the case of consumer goods, that's virtually always the consumer.

 

[brbo]

Another aspect of this for US-based people is that you simply do not have customs arrangements set up for "small" imports, such as when you order an item from outside the US. At present, no import taxes are collected on small items (less than $800 I believe) because the customs systems/people to actually collect this are not implemented. Many other countries have had this set up for years ... and it still does not run smoothly!

Good point. It will probably change very little in short term for end users that order directly from abroad.

I look forward to Photrio becoming a collection of threads about "how expensive that bloody EU shipping is". FYI, it's generally more expensive the other way around, but we are already used to that...

 

[brbo]

Yup. I'll not say what I think of economic theory. It would not be particularly nice.

Yes, I always say that it's very unfortunate that economics are left to the people that are not smart enough to be engineers and engineers not being smart enough to figure out economics (the theoretical field is largely run by mathematicians anyway). Joking aside, with the complexity of a human individual let alone 10 billions of them interacting it's not really surprising that they haven't come up with an equivalent of 100% perfect fluid dynamics simulation.

Fact of the matter is that for any given supply chain, money comes from the end and materials come from the start, and they move in opposite directions. That's as fundamental as, say, gravity or magnetism. Another pretty solid ground rule is that any link in the chain will attempt to offload risk, and it tends to accumulate at the point of the least bargaining power. In the case of consumer goods, that's virtually always the consumer.

If that was true, no producer would ever need to worry since everything will be paid by the consumer. Which is far from the truth. More often than not consumer won't (can't) pay whatever price producer imagines to be "right".

 

[koraks]

If that was true, no producer would ever need to worry since everything will be paid by the consumer. Which is far from the truth. More often than not consumer won't (can't) pay whatever price producer imagines to be "right".

Give me one example of a value chain where the end user does not foot the bill, and the value chain is not propped up by subsidies of some kind. AFAIK that's an oxymoron. OF COURSE the end user pays everything. When it comes to consumer products, OF COURSE the consumer is the one who pays. How's that even up for argument?

OK, there's one notable problem with/exception to this: externalities. As we all know, there's a massive chunk of 'invisible', unaccounted-for costs that nobody pays, and that's the cost we shift down to future generations. Planet Earth doesn't send invoices.

 

[brbo]

Give me one example of a value chain where the end user does not foot the bill, and the value chain is not propped up by subsidies of some kind. AFAIK that's an oxymoron. OF COURSE the end user pays everything. When it comes to consumer products, OF COURSE the consumer is the one who pays. How's that even up for argument?

You'll notice that I'm talking about price. And whether the price paid by the consumer will be old_price + tariffs = new_price. I'm just saying that is FAR from being a fact. In fact (and that is a fact) it will rarely be that. Consumers might opt for lower quantities at that "new_price", so supply side will be forced to adjust too (and in short term price is the only adjustment they can make). Producers lowering their expected margins is not something that never happened before.

 

[koraks]

old_price + tariffs = new_price. I'm just saying that is FAR from being a fact.

NSS (No Shit, Sherlock). I don't think anyone has made a case for that simplistic addition operation. The heart of the matter is the question whether the tariff will translate into a higher price for the end user, and/or whether/how much upstream value chain partners will absorb these tariffs. And to me, it's blatantly obvious that when it comes to the kind of film & paper you and I purchase, the we are the ones who will bear the brunt. Will Alaris & Co see a reduction in EBIT? Most likely, at least temporarily. But since they have vastly better leverage in this value chain than the guy who peering into a tray of developer to see his image comes up, it's kind of obvious that Alaris & Co will successfully implement a CMAS (Cover My Ass Strategy).

PS: ultimately, the calculation is going to end up like this:
New_price = old_price + cumulative_tariffs_across_value_chain + uplift_on_top_of_cumulative_tariff

 

[brbo]

That CMAS worked beautifully for this industry when they went from multi billion to a couple of million in profits (for those who didn't go bankrupt) in a very short period.

But since we are down to Sherlocks now, that is my cue to stop posting.

 

[koraks]

Well, it's certainly possible that tariffs will end up playing a role in definitively dismantling the analog photography industry. It won't be the only factor, but there are plenty of others that can combine into a perfect storm. It's not a particularly robust industry. So yeah, either we're going to foot the bill, or there's not going to be a product. There's not a whole lot beyond these options. Alaris isn't going to finance our hobby out of their own pockets, that's for sure.

 

[perkeleellinen]

There is a very similar discussion taking place in the world of skateboarding, where the main industry is based in the USA but uses Candian wood and finishes the products in China. The industry is already going through a period of decline and there's much talk about how this could push some firms out of business.

 

[Don_ih]

The industry is already going through a period of decline and there's much talk about how this could push some firms out of business.

I think it's pretty obvious the major losers will be the smaller companies and lower income families. Increased prices in the US will widen the gap between rich and poor and smaller companies are not prepared to take the hit.

 

[Don_ih]

In Canada, "About one in five businesses say they can survive less than three months without support if tariffs hit." - from a mid-February report. So this is a lot more significant than just the increase in price of products for consumers.

 

[BrianShaw]

I think it's pretty obvious the major losers will be the smaller companies and lower income families. Increased prices in the US will widen the gap between rich and poor and smaller companies are not prepared to take the hit.

… and the folks in the middle get pushed down closer to the “small/poor” category.