"Catalyst weighs in on Tariffs" Topic

link

Thank you Mark.

Thanks Mark. It is a good piece.

It's a nice complement to the GMT Games article, even if it has a little bit of snark in it. I noticed that how the product is coded for import is not addressed. None of this is in my old bailiwick (give me DOE and/or state rules on accelerator safety and health and then I might be able to spin a tale or two) so I'm not sure what to think about the coding issue.

Interesting read.

It was an interesting article.
However, it may be that game manufacturers need to design and built a game showing how tariffs work. Maybe it would sink into some of these folks after they lost several games.

Grelber

Let's see if I have this straight.

You chose to put all your eggs in the basket of a country that is doing everything thing short of issuing a formal declaration of war against your home country. And now your upset that the pipers bill is coming due?

Sorry cupcake, but you chose to dance with the devil yourself.

Stonemtn,

In manufacturing and development. if you only have one source for raw materials or services and do not have any domestic back-up plans, shame on them. First rule in procurement is to have multiple sources.

"if you only have one source for raw materials or services and do not have any domestic back-up plans, shame on them"

One of the points of the article is that there aren't any domestic backup facilities, nor, given the vagaries of policy, is anyone likely to invest in setting such things up. Rather like Apple can't magically shift semiconductor manufacturing back to the US overnight.

That is how the deregulated neoliberal economic system works, the one which the US spent 50 years foisting on the rest of the world and got very rich from. If you didn't want offshoring, you should have kept capital controls in place. Thanks a bunch guys.

You chose to put all your eggs in the basket of a country that is doing everything thing short of issuing a formal declaration of war against your home country. And now your upset that the pipers bill is coming due?

Sorry cupcake, but you chose to dance with the devil yourself.

Canadians, Mexicans, Panamanians, Danes (and the rest of the EU) are trying to disengage. But it takes time.

A very interesting article, well presented.

The 'StoneMtnMinis' comment was uncalled for, as you have already said that the facilities are not available in the USA.

His point was that they don't have to be in China. There are many other countries in the world beyond China. Putting all the facilities there didn't have to be.

Redcurrant Thecomment to which you refer are usually of that ilk.

surely if you turn over is so large a home grown set up would be explored and set up, this tarriffs thing isnt going to change short term.
But why did you put all your eggs so to speak in one basket and not have at least a backup. Im not a fan of China, conversly my GF loves it,and visited many times, the pendulum has to swing back as it does on a lot of matters the west has let slip and now needs to get a grip and its not going to be pretty we neglected our industrial might for cheap slave labour in a country that iantt friendly to thhe west

Martin,

There are print and bindery houses in the US that can pick up the buisness, but we as a whole are so used to go to the cheap to get products made.

Tariffs are sales taxes. All sales taxes are regressive.

Since we're at nearly full employment, how are we going to onshore all this tedious manual labor? Twenty the thirty million Chinese people work in factories making our iPhones and Walmart hauls. Even assuming American workers can do this more efficiently, where are those people?

Pro tip, if you want to bring economic activity to a standstill, freezing consumers and investors alike, the bluntest instrument would be changing the rules constantly. Uncertainty makes people wait.

We're in for a rough ride. Shift the portfolio to consume staples, healthcare, and utilities. Buy all the TIPS bonds you can. Enjoy all the stuff you've already bought. Look forward to a thriving secondary market in, well, everything. We can't manufacture dice and so forth like China can, but we all have a garage full of stuff. Long before board games and minis games are manufactured here we will be trading and selling our second hand toys.

And we are going to lose some small companies. Big companies, as ever, will be more able to shift things around, find loopholes, etc. Hopefully the small companies will reform when the storm passes, the talent will still be there.

it may be that game manufacturers need to design and built a game showing how tariffs work

That would sell. Best do it as a pdf with a d-i-y counter sheet.

A lot more games are going to be PDFs and STLs…

Interesting.

So a small business owner is supposed to have multiple sources for raw material and service providers.

And same small business owner is supposed to be able to switch to said alternative providers in little time and not miss a beat production-wise.

And said small business owner should not look for the lowest cost to quality ratio when it comes to producing his product.

Yea, right.

Back in the day I worked in the McDonald's system. We spent a year looking for an alternative to importing the toys from China. At that time the toys averaged around $0.28 USD each.

We wanted a North American supplier as one issue we wanted to plan for was ocean freight interruption. Either by war, port strikes, etc.

What we could buy for that price was a small, printed product. Think an 8 page coloring book the size of a deck of cards.

Exactly, Desert Fox. I guess, according to some above, it's 'too bad, so sad…'

What would have been wrong with announcing that efforts would be made to bring manufactoring back to the US and that some changes (specified (tariffs…whatever…)) would be implimented in a year or so. Giving everyone time to plan and adjust to the best of their ability.

Contracting to move production from one nation to another is difficult at best, extremely difficult for a small business with limited resources. How do you handle exchange rates as in when are they determined and what source on what date is used. When and how do you pay? When the game is printed, or shipped or received? How is IP handled? Are custom dies and tooling the property of who and does the local government generally not allow those items to leave the country (PRC generally doesn't). When do you pay the shipper and how are those rates determined as well as insurance? Is the new nation politically stable and generally stable for economic policy. Can the new supplier produce at a comparable level of quality without substantial reinvestment?

It is generally hard to produce a niche product such as board Wargames at acceptable profit margins. It is hard to impossible to produce a profitable product if the background economic basis is constantly changing.

True, McK,
business loves stability, and right now, that we don't have. Unfortunately too many businesses in the West, both in the US and Europe, have fallen for the false sense of stability provided by the Chinese government's market manipulation, and hence led us to this point where they now dominate in the manufacturing market.

Its ridiculous just how far the West has fallen in their lust for "cheap" goods.

Several US Navy support vessels (not actual USN ships, but vessels authorized to carry military goods) where built in China. Absolutely ridiculous.

However, in my line of work, many businesses are already attempting to concoct reasons to jump their prices, and are already trying to pass on "tariff" surcharges….on tariffs that don't yet exist and that they never actually paid.

We just had to tell a supplier recently to "pound sand" as they attempted to do exactly that-pass on a non-existent cost on already existent goods.

Agree Silurian as well, I wish this greatly needed reckoning was done with more tactical and strategic means: working with our current allies instead of alienating them, offering "carrots" to businesses to invest in the US manufacturing sector (tax free status, front of the line environmental and bureaucratic "licensing" to build factories…etc…)

Even though China's economy is not the tiger many in the West say it is, the big advantage Xi has: he don't give a flying fig how many of his people suffer.

"All sales taxes are regressive."

What does that even mean? Do you even know?

In any case, whatever you mean by it, the truth is that sales taxes are the most voluntary form of tax. It is the single form of tax which relies utterly on the consent of the taxpayer, without threat of harm by a government to force them to pay.
This is because if you don't want to pay the sales tax, you don't buy the item or service being taxed.
Instead, you personally determine for yourself whether you can afford the tax, and can do so at the moment of purchase (and thus, tax payment). It's simple, direct, requires no arduous math or forms or "schedules" or "tax table" or deductions or deprecation or deadlines or any of the other obnoxious, confusing, threatening, or abusive denial of property rights (or other rights) caused by all other forms of taxation.

And, for that matter, a sales tax scales directly based upon the purchaser's ability and willingness to pay, as well as the person's self-perceived wealth. A wealthy person will pay a considerably higher amount of taxes based on the simple truth that the wealthier a person is, the more goods and services that person will be able and willing to pay for— and thus, they will pay the taxes along with it. (Duh. How do lefties not get this?)

Indeed, a sales-tax only tax structure would actually encourage more people to purchase more goods and services (thus boosting the economy for everyone), because people would no longer be worried about "protecting their wealth" from taxation. Investment would thrive— especially short term investment— as the returns on that investment would be tax-free. And note that the investment would invariably be in actual economic activity— the creation of more jobs, more innovation, more products, more services, and inevitably higher real wages and salaries.

Tax attorneys and accountants would take a hit, and the various tax courts and tax collecting agencies would vanish, being no longer necessary to enforce tax demands. But that's about it— and there is plenty of law and plenty of accounting that can and truly needs to be done even without having excessively complicated tax codes to deal with.

Modern tax structures on income and property are horribly "regressive," as they do not actually reflect on the individual's ability to pay. Property tax in particular is especially heinous on this note, as real estate seldom reduces in value— yet its increases in its taxed evaluation often have nothing to do with the owner or the actual property itself, but rather on secondary or tertiary things over which the owner has no control. Nor does the tax respond fluidly to changes in the marketplace, as the assessment process is often rigid, fixed in occurrence, and never really based on much aside from the whim of government, and not the actual market value of a property. In any case, it certainly has nothing whatsoever to do with the taxpayer's liquid assets— that is, "cash on hand." And that is grossly regressive.

Income tax, likewise, pays little or no attention to the effects of inflation on the individual. Yes, supposedly the tax is on the individual's income, but that doesn't necessarily reflect the real value of that income, nor the actual necessities the person faces and must also pay. And again, the rates are set arbitrarily based on government formulae, and are barely if ever responsive to actual economic conditions for either the individual or society at large. This should not be surprising, as governments are never models of efficiency, and rapid adjustment to fluid economic reality is simply not something governments of any sort ever manage to do; indeed quite the opposite is true.

In any case, as I have repeatedly pointed out on TMP, all taxes in the end are taxes on the individual. Businesses pay no taxes. Period. Any tax on a business is inherently nothing more or less than a cost addition to its cost of goods or services to market. And that can only be paid in three ways: Increase price on the consumer, decrease labor costs (fire people, cut their wages, don't hire more, don't give wage increases), or reduce the money going to owners and investors. In all three cases, it is the individual who pays the tax— whether that be the individual consumer, the individual laborer, or the individual investor (which all owners are). The business itself pays nothing, as it is in reality nothing but a legal fiction to allow a group of individuals to participate in economic activity as a more efficient functioning whole. Coca-Cola owns and does nothing; only the people involved actually own anything, or do anything— and thus when costs go up on Coca-Cola, they really just go up on people.

So where does this leave us? Well, it leaves us with the fact that a tariff is indeed a glorified sales tax. And yet that tax is actually quite fair, as it is entirely within the power of the consumer to avoid the tax by simply not purchasing the product or service subject to the tariff. QED. Alas, this does mean a curtailing of economic activity with regards to the goods in question.

But is that all that is going on here? No, it is not. In fact, it is exceedingly simplistic and erroneous to see the situation in solely that light.
First of all, the tariffs are already present on international trade, and already act as a gross barrier to trade, and increased cost to consumers the world over— we just are so used to them that we don't notice them.
What is now happening is bringing those tariffs suddenly into view. We now see what the various national governments (and would-be world governments) are doing to stifle free trade. And like crooks caught in a blinding searchlight, they are suddenly forced to negotiate on new trade deals— trade deals that will produce actual free trade which we do not have now. Thus, these tariffs are indeed, as I have said, a negotiating tool. And it's working.
Reports are now appearing that India will agree to a massive free-trade agreement and removal of tariffs on US goods. Israel and Japan are following suit. Indonesia is negotiating. And they are not the only nations doing so.

And here's the kicker— one of those nations is in fact… China. Yesterday it was reported that China is already quietly making trade concessions on electronic material and components used in various devices— including Apple products and Nvidia products, among others (and also medicine and medical devices). And here's another relevant concession— they are going to remove tariffs on imports of ethane, which is a key compound in the production of plastic goods— like model soldiers, dice, etc.. The source of all that ethane? The United States of America. China doesn't produce it; we do.
I think we may soon learn that the gaming apocalypse will not actually happen.
Xi has to save face, of course… but I suspect the US will find a way to let that happen AND achieve the free trade goals we seek.

The sky is not falling. It never was.

There is a limit the consumer will buy for. In the case of Battletech Force Packs, 29.99 (example) might be limit where Catalyst sees a dropoff. A typical force pack contains 4 models so 29.99 is questionable as there seems to be griping with buying force packs that limit customer choice/freedom in buying. With the extreme proliferation of 3D printing, Catalyst, being a small company, is in a particularly precarious position even though their product has a solid following compared to curiously less-popular brands. GW conversely is apparently 3D printer impervious given its sheer size and capital backing.

Catalyst, in their case, should be worried. Tariff pricing that forces their price point above 29.99 (example) could be a tipping point where people give up on Catalyst-supplied miniatures and move to 3D printing. Given they seem to not be restocking (a Google search will bring up this thread pretty often), it would seem they got caught in a bind – the restock was in process but now their store is showing cracks and empty spots.

However, 3D printing is not the begin-all, end-all either. Barring mention of customers not already in it, 3D printers require parts and supplies from (generally) Chinese suppliers. So, how long those remain "affordable" is a good question. I expect 3D printer costs will go through the roof if this keeps up.

Nevertheless, Catalyst was/is riding high on the Chinese supplied stuff so putting their eggs into that basket made sense. However, Catalyst "should" have been looking around (any smart business does this as a wide portfolio is less dependent on specific suppliers) and the letter Mr. Coleman relays does have a real sour grapes subtlety that the gravy train is coming to an end.