I have read a lot of posts on tariffs and I believe some people are missing the actual point of impact. With 145% tariffs it will be irrelevant what the US consumer ends up paying, as the goods will very likely NEVER make it to shelves!
If you haven't produced in or shipped from China, you will have to stop everything. If you are, however, in the very unfortunate position to have goods on the water as we speak then the real problems starts now.
To illustrate the impact, here is an example:
A US based importer of toys produced in China, currently has product in value of 10 mio USD on the water...this boat is 3 days away from arriving to the US border. This is what the tariff situation currently looks like when his goods pass US customs:
Value of Goods: $ 10.0 mio
Tariffs 145% : $ 14.5 mio (145% x 10 mio)
Freight, let say: $ 0.5 mio
Total landed: $ 25 mio
The US importer pays all of that upfront. So this company will have to sell the goods for 25 million just to break even, a 250% mark up from his cost of goods sold.
The worst part is paying goods, customs and freight upfront, even if the consumer can afford the higher prices. How many toy importers have that kind of cash flow or capital reserves just to pre-pay? One way or the other, most companies will go out of business.
Yes you can store your goods in a bonded warehouse in the hope the situation calms down, but that costs money as well and you can only do it so long and if you end up not paying at all...your goods will be sold at auction.
If the current situation remains, the issue should not be about what consumers end up paying...it is about the whole supply chain being shipwrecked resulting in empty shelfs due to lack of a supply. And what does a lack of supply result in....higher prices. The few US companies producing goods in US will never be able to fulfil demand....and what if their much needed raw materials are coming from China?
Toy supply from Europe? Possible, but limited. Supply from Vietnam, India, Mexico? Possible but limited.
There are no winners here. Under these circumstances there will never be toys from China to import...so no money coming out of tariffs, lack of goods at retail and last but least disappointed kids. This is a self fulfilling prophecy.
And we are running out time. Fall season production is happening now. Any production starting as of June...is too late.