February 3, 2025 – Tariffs on Goods from Mexico and Canada Paused
The announcement was made today, of a 1-month hold on the 25% tariff, following talks between US and Mexico leaders.
A later statement also announced a 1-month hold on the 25% tariff to be imposed on goods imported from Canada.
February 2, 2025 – New Canadian Tariffs on US Products
the Government of Canada is moving forward with 25 per cent tariffs on $155 billion worth of goods [imported from the United States]
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The first phase of the Canadian tariffs on US goods will go into effect on February 4, 2025, with affected products including orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and pulp and paper.
Additional tariffs on US products will be made available for a public comment period prior to implementation, and is expected to include products such as passenger vehicles and trucks, including electric vehicles, steel and aluminum products, certain fruits and vegetables, aerospace products, beef, pork, dairy, trucks and buses, recreational vehicles, and recreational boats.
Source: Canadian Government
January 31, 2025 – New US Tariffs on Products from Canada, Mexico, China
It has been confirmed that, starting on February 1, 2025, a 25% tariff will be applied to products imported from Mexico, a 25% tariff will be applied to products imported from Canada, and a 10% tariff will be applied to products imported from China.
To summarize:
Tariffs to go into effect on February 1, 2025*
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- Mexico: 25%
- Canada: 25%, 10% on energy resources
- China: 10%
Source: White House Briefing via YouTube
*Update: According to news reports, the tariffs will be going into effect on 2/4/2025 at 12:01 am.
It is my understanding that these figures reflect new or additional tariffs. There are numerous existing tariffs imposed on goods imported for China; it seems that the 10% tariff is on top of any or all of the existing tariffs.
New tariffs, imposed by the previous presidential administration on goods imported from China, went into effect in September 2024 and on January 1, 2025. Additional tariffs were set to go into effect on January 1, 2026. More info is via Federal Register publication 2024-21217 (89 FR 76581).
Notes
I will be updating this post if or when there are new developments.
Why is it relevant to keep informed about tariffs? See Also: Tools, Tariffs, and Price Uncertainties.
Please keep politics out of the comments section. If this proves too difficult of a request, I can make it easier for everyone by closing the comments section.
We can talk about which tool brands might be affected most, how this could affect prices, which brands or tools have been affected, and similar.
Keep the comments section welcoming and civil.
JR Ramos
On the consumer end of things I’m curious to see whether retailers will increase prices before they sell through existing stock and/or when manufacturers institute their own price increases. It’s dirty, but a lot of retailers will do this even if they have “old price” stock to last for months.
Some DeWalt tools and many car parts will be increasing by a lot..and tequila. I wonder if this will apply strictly to food/ag products and oil or timber from Canada.
And then….what will the tit-for-tat retaliatory tariffs be? Some suggestions that Canada floated will hit segments of our markets hard.
ToolGuyDan
> It’s dirty, but a lot of retailers will do this even if they have “old price” stock to last for months.
To be fair, just like a gas station is always selling you next week’s gas, if wants to always keep 4x of some SKU on the shelf, then they’re going to charge you based on what it takes to refill that shelf, not what it cost to stock it the first time.
If, hypothetically, you bought for $5, and were selling it for $10, but if you wanted to re-order it, it’d cost you $500, you can charge anywhere between $505 and $1,000 for it and not hear a peep out of me. Why? Because if instead you paid $5 for it but it’s 10¢ now, I sure as heck ain’t buying from you at $10.
JR Ramos
They aren’t commodities, though (talking tools here). An honest business to a largest extent will just do cost+ markup at the gross margins that keep them in business and deal with pricing changes as they come. Now, on inexpensive items and/or lower cost high volume (sales) items where the price increase is more normal, like 2% to 6%, generally, then marking up retail pricing ahead of time isn’t so bad. Bigger ticket items or huge price increases like this 25% potentially will bring, however, that’s just laziness or greed. I did this for a living for quite some time (in tools/industrial supplies) so I have a good feeling about who is doing what and how…just curious what we’ll see with this ridiculous situation.
The 400% to 1000% markup on loose hardware/nuts/bolts is still a thorn in my side, though…mostly to account for waste and theft and other shrink. Paying 89 cents for a 0.82 cent bolt from China is just all kinds of wrong.
Brian
When dealing with shipments of large quantities of small items, you have to think about the breakdown of the total cost to the importer.
Shipping costs aren’t tariffed. The things on the boat are.
The cost of shipping vs the cost of goods on the ship is much smaller when the ship is filled with tiny items (like washers, or electrical components).
When the ship is filled with large bulky items (cars, washing machines), the shipping cost is a larger share of the overall cost to the importer, so the tariffs are less of an impact on the final overall cost.
Sorry to say but expect to see the price of washers, screws and anything made with tiny parts that are shipped and then assembled here go up.
Andy
Retailers make increases based on product replacement cost, not original cost. Otherwise they’d always be chasing their margin.
JR Ramos
Pardon me but the way you stated that seems a little nonsensical. It’s pretty simple really….cost + gross margin desired, and yes, of course it varies (up and down, both). You are *always* chasing margins, especially if your business is such that you are gaming discounts upstream and offering discounts downstream…it’s always in flux, just part of the business for most retailers. My curiosity is which retailers will take advantage of the situation – so to speak – and mark up retail pricing earlier than necessary.
Dave
The smart ones will.
KMR
I am in the vintage European auto business. We have a healthy parts business and a service side (restoration / performance /vintage race).
Immediately after the election I started pulling forward our inventory orders for 2025 from European suppliers and I raised our pricing ~15% across the board on parts just before Thanksgiving.
Part of this was to get ahead of other competitors that may not have been as prepared or forward thinking, and I didn’t want to face inventory shortages once they decided to wake up to what was going to happen. After Covid, we want widespread shortage of certain items that took about 18 months to work through the parts industry for the suppliers and manufacturers we source from (if it isn’t something we produce ourselves).
And then the second reason was because I figured it would allow me, along with anticipated price increases, to add about another 20-25% to the margin of those goods instead of waiting and sourcing that inventory later on.
I’ve basically bought a years worth of inventory in the past 10 weeks and I’m going to keep doing that as capital and time allows. This isn’t about being honest, it is about being smart about my sourcing requirements, the potential time lags involved, avoiding potential shortages, and the increased expense tariffs impose when enacted. If I’m ahead of it, as I think I am, good for me… but it is still an investment to do this and that extra margin is the reward _IF_ I’m right. (I think the EU will generally face 10-20% tariff on autos and auto parts manufactured within the EU at some point in the next few months).
Dave
The smart ones, like I said. I’m doing the same in my business.
Mike
“and tequila”
And beer. Corona Extra is the second most popular beer brand in the US.
JR Ramos
From the sound of it earlier, US spirits will face steep retaliatory tariffs from Canada. Liquor is such a huge $$$ business globally that it will really put some hurt on several states, assuming it’s enough to curtail shipments and sales (never know…people want their drink and will pay for it).
MFC
I think the price for tools will increase, but not by 25% at first. It will be gradual, like boiling a frog. They have already been buying and selling at high gross margins for a long time. They do not simply take cost of goods +time and margin and use that as their basis. They try to squeeze every last red cent out of anything they do.
So, if they haven’t been making way more than 25% extra off of their products then they’ve been doing a terrible job.
I foresee everyone upping prices as quickly as reasonably possible, but it will take some time. It’s what we have seen in the past.
I could be wrong, and it’s possible that they immediately hike it, but even that takes time to update skus and msrps.
Also, tariffs are a tricky business. Product classification categories, base rates for items vs. msrp, products that exchange hands over the border for assembly or processing (only to get shipped back again), all have different rates and tariffs. Businesses will continue to fight and find ways around tariffs as much as possible.
Adam
With promotions like $400 off $1000 starting up, I think they have room to spare to not pass on all the increase. I just picked up M18 rockets for $112 each this weekend (old promo sale price overlapping with new BMSM)
ToolGuyDan
Is it clear to what extent these will affect finished goods versus parts? If a battery shell is, say, molded in Topeka, filled with cells and soldered in Oaxaca, and put in plastic packaging in Calgary, how many times will that battery have been subject to a tariff when it arrives in Poughkeepsie?
Stuart
It’s my understanding that tariffs could be imposed when products and money changes hands across borders.
JS
Every single time it crosses a border. Car parts often do five or six times cross a border during manufacturing and assembly. Price of cars will go way up.
SB
I am wondering how much Tesla models will go up in 2025 with tarrifs
ToolGuyDan
At least as of a few years ago, a Tesla was actually the most American car it was possible to buy. Manufactured in Fremont, California, and because so many of the parts are things that non-electric cars didn’t need, Tesla started out doing an awful lot of the manufacturing in house (and, conversely, they didn’t need any of the hundreds of specialized components that make up a typical car’s powertrain, nor its associated peripherals like plumbing and pumping for fuel). I once made a friend who’s a GM tech very, very angry when I pointed out that his giant truck with an American flag on it was less than half as American as a Tesla. (Even when only looking at sales within the US , less than 48% of the cars sold by GM to Americans did their final anssembly in the U.S., compared to 100% for Tesla.)
MFC
Things that have temporary transport across a border for processing or assembly, don’t have as heavy of tariffs, as if it was staying over the border. At least, that’s my understanding. It is hard to find out exactly what the hikes will entail, but I have a feeling that some things will be hit hard, and others hardly at all. It’d be nice if news sources weren’t so focused on the “Trump” part of it and actually wanted to inform us.
MotoJ
Looks like everything that crosses the border, both finished goods and intermediate products. As usual it is unclear as of now.
The tariff would be additive unless the intermediate fabrication in the US was in one of the Title 15 Foreign-trade zones (https://en.wikipedia.org/wiki/Foreign-trade_zones_of_the_United_States). For FTZ intermediate fabrication there would be no impact for that portion.
This is a tariff so the basis is slightly different than for duties, but for most practical reasons the same.
Peter C
Hey now. I was born in Poughkeepsie. When I was little I thought it was the big city. Let’s be kind.
ToolGuyDan
I assure you, I didn’t mean anything by it—I just picked iconic-sounding city names in each country. I’m very sorry if I implied Poughkeepsie was… I’m not sure what, exactly? A city without a manufacturing base for batteries? A town where people buy things? From your comment, perhaps you believe that I called it a backwater town, but frankly I need some guidance in order to understand how that implication arose.
Ken
So which power tool brands will be affected *least*? The only mainstream power tool company that I know of that has a substantial manufacturing capacity for power tools outside of China is Bosch (Malaysia, Hungary, Germany, Taiwan). Am I wrong?
100% of my Milwaukee, DeWalt, Kobalt, and Ryobi tools are made in China.
Matt_T
Bosch do seem to be in a relatively good position. Lots of manufacturing outside of PRC and lots of sales outside the US.
TTI and SBD are probably much more dependent on selling chinese goods in the US.
OhioHead
DeWalt moved a bunch of production I thought from China to Mexico a few years, what % of tools made by DW made in Mexico?
TTI brands, Chevron brands, to name a few off the top of my head.
JR Ramos
My first thought was the euro brands, too…Bosch foremost but I suppose Fein and Metabo as well…what about Festool? All the stationary tool manufacturers will suffer from the 10% and it might be a time for us to suffer downstream, too….margins are already pretty tight on machinery. DeWalt was my first thought weeks ago when these tariffs were first bandied about, since they moved so much to Mexico. I guess it won’t hurt the cost of hand files anymore but I think Nicholson still does a fair share of file manufacturing in Mexico…they aren’t what they used to be but they’re still better than anything from China or India (Portugal seems to have gone by the wayside) but at least you can still buy Italian made files which are excellent (much less so Swiss and German/Austrian these days but they’re still around). Hand tools will see another unfortunate bump after all the inflation the last many years plus what seemed like frivolous cost increases by retailers just before and then throughout and after the pandemic.
Outside of our comparatively small world of tools, there will be painful increases in a lot of goods for US citizens. A great amount of household major appliances and HVAC units are made in Mexico, as are some medical devices. Car parts will be a big one. But the food will be huge, I think.
Jronman
Tariffs are nothing new in fact there was a time when this country was almost exclusively tariffs. The EU already tariffs the US, and I wouldn’t be surprised if other countries tariff us. Maybe the tariffs will bring tool prices down as they are a way to negotiate.
JR Ramos
It may be possible for a few US manufacturers to stay level, but could/would they reduce prices? If not then we don’t see any price reductions from tariffs…we’ll pay more or equal for the same as we have now. If we were to actually scale up production and also have increased sales, then maybe some companies would be able to/be willing to lower prices, but that depends on the retailers as well and if their costs become higher then they certainly aren’t going to reduce margins much voluntarily for our benefit…sometimes they just take their reduced cost on an item and keep the retail price the same, pocketing the little extra profit. These are not insignificant tariffs as they often have been, and there are really no checks and balances in the system…it’s a blunt and stubborn attempt to make something out of nothing, hoping that it happens, but I don’t know if we will do it…not in a free capitalist system. It’s amazing what we all did together for and during WWII but those days seem to be long gone, so our current landscape is not one of mutual benefit (or respect) when money or success are involved. In the end, if it’s beneficial to us at all, I suspect it will only be for the ones that own manufacturing companies and perhaps their employees (and investors/stock holders)…it won’t be downstream.
Jp
Guess I will go back to buying more HF tools. They will be winners here. Milwaukee will lose a lot of middle budget folks who stretch to buy their products.
Stuart
What makes you think HF would be less affected by tariffs? That doesn’t seem likely.
Brian
HF’s just cheaper as a baseline
Jason M
Plus with Joe on board they’ll be much more aggressive
Stuart
Both companies have some ability to absorb higher costs. Milwaukee has shown that they can shift sourcing for certain tools. Can HF’s suppliers do that?
I don’t see either having clear advantage here.
It’s also not a question of Milwaukee vs Harbor Freight, but Milwaukee vs Harbor Freight suppliers.
JR Ramos
I agree with Stuart…both HF and Milwaukee can easily absorb these increases (we’re talking 10% here for them, assuming it does in fact apply strictly across the board of products). HF absolutely can absorb this, if they want, without increasing pricing on probably 98% of their products. I know what a lot of these things actually cost (for a mid-size company, to say nothing of potential volume discounting for large companies like HF) and believe me they have excellent margins these days…steadily increasing over the last many years. The could choose to increase retail pricing by just a small increment (say 3-5 percent) to take the sting off. If they do this, however, I wonder if they will scale back their discounting/coupons/sales even further than they have, and/or if they will slow down or stop their rather amazing expansion efforts – they’ve really been opening new stores an an impressive rate for awhile now.
I would expect Milwaukee just to pass it on to us, perhaps even more than they should, rather than scaling back “superfluous” employees like outside sales reps or marketing, etc. But imho Milwaukee could do the same as I suggested for HF very easily. They’ve just become really greedy riding on perception pricing and success.
Jp
My intention in the original post was that HF is cheaper. Any cost increase will not affect my buying HF priced items. But it will affect my ability to afford Milwaukee products as they start at higher prices. At least one of the posters above understood that. From a buyer perspective, HF does have a distinct advantage if you consider the different people who visit your site. It may not be a rote advantage vs not from a corporate boardroom perspective. However, the boardroom won’t deny any extra sales from these effects aren’t some advantage.
Matt_T
If TTI loose Milwaukee DIYer sales they’ll likely pick up at least some of it with Ryobi and Hart.
HF are could well be the biggest loser IMO. They’ve already gotten up there in price on a lot of stuff. And they’re totally dependent on US sales.
KC
I saw a news conference today from the Oval Office where it was said that tariffs on oil may be lower than tariffs on other goods, to answer an earlier question . I would also add that several years ago, a friend who worked at a woodworking retailer had told me what the markup was, specifically on some router bits, that were on sale at the time for less than $10 each. The margin even at the sale price was SEVERAL hundred percent. I left without any of those bits because I was concerned about the quality of them. I prefer that spinning things don’t come apart in my presence. The bits were being marketed, I’m pretty sure, under the Porter Cable brand. If actual cost to importers is still like that on many foreign goods, and the supply chains really want to continue to move products, then maybe we won’t see more than a negligible increase. Or maybe we won’t see as many sales or deep discounts like we just saw during the Christmas holiday shopping season. As much as I hope it doesn’t happen, dishonesty and greed can always prevail. The threats of these tariffs have been public knowledge for some time now and manufacturers / importers have had time to do some planning to prepare for them to go into effect. Hopefully they’ve done a good job.
Mark
I suspect many of us will be going out to customers next week with price increases but at least we have a pretty solid irrefutable reason to point to. Customers will ask what we can do to shift manufacturing around but the chances of moving into the US are slim to none. Instead, we’ll move manufacturing into a more neutral area like Vietnam or India.
PKS319
The biggest impact is going to be on material costs – lumber, plywood, and engineered panels. Inventories turn over frequently and these are not large margin items. I imagine that they will increase in cost roughly in proportion to the tariff costs. This will of course impact homebuilding, contributing to the current problem with insufficient new home supply – further increasing inflationary pressure on housing. It is very hard to see how this is going to be good for anyone. Even US mills will suffer from higher supply costs.
George
This is my biggest concern. The cost of new and repair materials will impact the cost to consumers for projects, both DIY and contracted.
It’s merely inconvenient for a hobbyist like me if costs go up and my tinkering gets put on hold or delayed, but I can’t see where this will not cause a delay or cancelation of real projects which will in turn impact thousands of small businesses. The resultant attrition will be felt for a long time.
JR Ramos
I thought of that, too, but I don’t know how much we source/sell from Canada anymore…I thought a lot shifted to South America, for what isn’t sourced here. It crossed my mind that maybe this could shift building trends more toward “alternative” materials like have become popular around the globe…more metal and concrete and composites, less wood. Those generally cost more, though, but they have more benefits long term, fewer drawbacks (costs) down the line. So I hear anyway.
George
From what I have attempted to glean from (relatively) unbiased sources, it’s “mixed” and “regional”. Which I suppose is the supply-chain analogue of “it depends”.
I would love to see more concrete and steel, but the cost skyrockets. Also, and more importantly, the skill set for working effectively in concrete as well as the materials testing requirements would put it well out of the range of the majority of residential builders. I barely trust the people who built the three homes I’ve owned over the years with wood construction. Based on their attention to detail, I wouldn’t trust a concrete structure to them beyond a patio.
S
It’s also a very odd time considering the damage in Florida from the hurricanes, and the wild fires out in California.
This will dramatically reshape the rebuilding efforts at both ends of the country, as the cost to rebuild rises, especially if any of homeowners had older insurance plans that were already not accurate on current housing prices or material valuations. But it’s bound to also muck up even current valuations…
Rob H
Disaster recovery working with a government acronym agency is a nightmare with increased costs. We’ve been working on a project since Category 5 Hurricane Michael rocked through Panama City/Mexico Beach FL and it looks very much like we won’t be able to move forward with actual building replacement because the cost of materials and labor has increased so much due to how much was damaged here, Covid putting the brakes on many things with a workforce that dwindled, additional disasters since then driving up costs, and now additional tariffs. The funding from the letter people amounts to about $125 per square foot and our bids are closer to $350+ depending on the contractor. This is likely the final nail in the coffin for our rebuild.
Mopar4wd
I know a lot of northern states ship raw wood to Canada to be milled I have to imagine the cost of dimensional lumber will go up quite a bit.
TN
I’ve done an analysis on this before and without getting too in depth, from an industry perspective, the biggest hit industries will most likely be pharmaceuticals, computers/chips, oil and gas since they rely so heavily on imports in their supply chain–but expect increased costs across the board.
Whether or not Companies erode their margins to pass savings on to consumers/customers is up to Companies. Demand will drop and it will be more about maintaining these margins so passing the costs onto the customers.
From the latest U.S. Census Data in 2024, the U.S. imports about $3.3 trillion in products. Of that $3.3 trillion, $2.3 trillion entered the U.S. duty free.
Last year, on these imports, the U.S. collected about $81 billion in tariff revenue. Based on the latest proposed tariff policies, on $3.3 trillion in imports, proposed tariffs could bring in about $900 billion–if there are no retaliatory tariffs from trading countries (highly unlikely in my opinion).
Many U.S. multinationals built their supply chain based upon Free Trade Agreements–these Companies that rely on beneficial supply chain in Canada, Mexico and China (our largest importers by value) will be hit the most (ie. Ford Auto with factories in Mexico, Caterpillar Inc with assembly facilities in Mexico and Canada, Intel with capacity in Israel and Mexico, etc.).
I expect prices to increase 10-20% this year if these tariffs hold out through the end of the year. Companies just got through the COVID mess that wrecked U.S. supply chains for about two years. It’s like recovering from a cold only to get bronchitis a month later…I also expect companies to heavily lobby against this.
In any tariff scenario, who ends up holding the bag at the end of the day? Consumers.
Scott K
I know companies made a concerted effort after the pandemic to diversify their supply chains, so hopefully some companies will be able pivot to lessen the impact. As has been widely reported, a majority of these tariffs will be passed onto consumers which will probably result in retaliatory tariffs that just hurt everyone. Hopefully this is short lived. Car are already relatively more expensive than pre-pandemic days and this will likely drive them up even more. There will likely be an increased need for tools, lumber, and other building supplies to rebuild areas impacted by the wildfires – the timing of this is disgraceful.
fred
I’ll be taking a look on and off at the Lee Valley web site to see if prices on Veritas (made in Canada) products go up. As of today – there is no notice on their webpage – but they may never announce this – only quietly adjust prices.
John E
There is a “de minimus” statute that was passed into law in 2015 that allows individuals to import goods into the US tax and duty free up to $800 in value per diem. Since this was enacted by Obama we’ll see how quickly it does or doesn’t get overturned.
Michael
If I understand correctly Lee Valley shipled goods to us in the USA from a US warehouse in Ogdensburg NY, and now Las Vegas since it appears that’s where they moved their US operations. So based on that Lee Valley pays the tariffs and will eventually have to pass on at least some of the cost of the tariffs to us. Now they have some stuff made for them in the USA, most notably some of their squares, but I can see those going up as well.
fred
That was my thought too for them. I assumed that Veritas goods stored in their US warehouse would be held in inventory at a cost that includes the tariff.
Maybe with some others like Jessem – shipping direct to the US consumer from Canada – you might be able to take advantage of the $800 per diem exclusion. But I wonder what Jessem prices on Amazon will look like if they are shipping goods to an Amazon warehouse and then to the customer.
S
The deminimus law is no longer for Chinese products.
https://www.engadget.com/apps/usps-backtracks-on-suspending-packages-from-china-140013986.html
JR Ramos
Apparently trump put a mechanism in this new order that does away with the de minimus. They’ve wanted to nix that for years anyway (“they”…lots of people) just as they wanted to nix the “developing country” status of China in terms of the subsidized postal services, which they have I think mostly accomplished now.
We’ll have to see how it all shakes out and what deals or compromises may be struck tomorrow.
S
It’s important to note. The new laws abolished the deminimus rule. So ALL packages inbound from china are subject to a 45% tariff.
https://www.engadget.com/apps/usps-backtracks-on-suspending-packages-from-china-140013986.html
J . Newell
So the cost of much of the lumber that will be required to rebuild all the residential structures in LA just went up 25%…
Badger12345
The new tariffs are going to make it hard for the Fed to control inflation with adjustment of the interest rate. The consumer is going to experience real inflation and what can the fed do without driving us into a recession? Across the board tariffs are a blunt policy instrument.
Richard Miller
I’m not convinced that these tariffs will be in place long, therefore I am not convinced it will make much difference in the pricing. I will be watching.
Richard
I hope you are right. But AFAIK the majority of his tariffs from the first term are still in place. It doesn’t sound like there’s been any specific demands “if you do X then the tariff will go away” so I’m not as confident as you that these won’t affect us.
Ben
The vast majority are still in place, yes.
Joellikestools
I would think a company like Tekton will be in a a good spot, since most of their tools are USA or Taiwan COO. Channellock might be in a similar spot between the USA and Spain made tools.
Mr. C
Taiwan is getting hit with up to 100% tariffs.
It’s been loudly rumored that European Union tariffs are next. So Spain isn’t safe either.
Nothing is safe.
Jamanjeval
It’s a bold move. I think a lot of the confusion is due to the tariffs being applied for multiple reasons (immigration, drugs, manufacturing) and muddling the message.
There will definitely be some pain if this all happens at the reported rates for an extended period of time. But that’s disregarding all the past pain of when these industries were first outsourced. Change is hard and it doesn’t always feel good even if good comes from it.
Maybe it *is* time to rebalance. It seems we’ve reached a tipping point where products are not made in America because many supporting industries are overseas and the costs (time, money, transportation) to split the production are prohibitive. It’s an ecosystem that enables effective production.
I don’t see re-shoring as a huge boost to employment. At least, not equal to when the industries were sent overseas. Rebuilding from the ground up vs retrofitting will enable more automation to be utilized. The benefits will be from diversification of the supply chain and rethinking of manufacturing.
Richard
On average tariffs end up being countered with tariffs. You basically end up increasing costs for consumers on both sides and the only real winners are the 3rd party trading partners able to buy more at decreased prices (due to supply and demand).
I’m all for improving the quality of life for Americans. It seems that tariffs tend to disproportionately affect low margin products as the sellers have no wiggle room, versus luxury items have some wiggle room in terms of pricing. Like: a 2×4 will like see the full cost increased passed on, a luxury sports car…not (necessarily) so much. The result is the poor get poorer while the rich weather the storm with a few bumps.
I’m personally torn between kicking myself for not buying more tools on BF when I clearly saw this coming versus holding on to a strategy of not buying what I don’t need. I would like to see some IP stuff get ironed out: a sawstop (detection technology) in every shop and shadow lines on every miter saw.
Kristian
I’m interested to see how ‘premium’ brands that make their products in the US or Europe play this. Are they going to keep their prices, or maintain the price difference between themselves and the cheaper version of their tool from competitors?
The pessimist (or these days ‘realist’) in me thinks things will get worse for the consumer.
Jim Felt
Living in a state with no sales tax always makes me curious about these kind of things.
I wonder where this specific increased Federal revenue will end up going? To support new programs? Pay down the “national debt”? Or federal tax “cuts” for whom exactly?
S
There’s been hints at a plan to somehow make the entire USA a similar model as your state, by not having income tax, and taxing only products or goods sold elsewhere.
The concept, I believe, is to make companies carry the burden of country costs. But it seems to do so in the vacuum of not understanding who buys the products those companies make, or how company costs translate to finished product pricing to consumers.
But I also expect many of these tariffs to be carved up to suit specific niches within a few months.
The rebuilding in Florida and California are political hot spots if building material costs rise too far.
And the automotive segment who are already battling their own issues with final product costs, for them to have all the existing american workers idling plants due to rising costs also won’t be great.
ElectroAtletico
Maybe this will encourage more production to return to the US. Milwaukee hand tools are steadily returning hand tool production. Let’s see the rest join.
pa hint: no tariffs on Japanese or German tools!!!
S
The main issue with returning production to the states is that this is a guaranteed 4 year president.
It takes more than 4 years just to build blueprints and collect the materials for a factory, and can easily take another 2-4 years to get the plant operational. Plants are simply not built on gut reactions to 1-4 years of changes. It would be poor business.
Meaning that while these are hot button issues, production of anything is not likely to change all that much during his entire term. As I witnessed the last time with semi conductors, they just increased the cost to adjust for the new rules, but maintained facilities where they were for the entirety of his term.
Goodie
Without getting political, it’s also very difficult to base long term decisions based on what that 4 year president decides. Capricious decision making defined the first 4 years, and it will influence this term as well. It’s very difficult for companies to make long term decisions when policymaking is this fickle.
Stuart
New US production comes down to cost, not presidential “decision making” or “policymaking.”
Companies – most notably Stanley Black & Decker – have already said that the expected tariffs won’t lead them to bring production back here.
Andrew Holmes
A problem with bringing manufacturing back to the US can be seen with the Milwaukee hand tools, a $50 pair or lineman pliers isn’t realistic for everyone, and there isn’t a real easy way to reduce costs with purely US manufacturing, there is a constraint on raw materials here.
Stuart
Milwaukee’s USA-made lineman’s pliers start at $40. Klein lineman’s pliers start at $35, and Knipex start a bit higher. And no, it’s not a cost every user can endure.
eddiesky
Just want to chime in that I needed a tool, a wetsaw, for tile work. Local HD boxes that rent were always out on weekends and you can’t reserve them. So I thought, I’ll just buy one, then I know someone that does reno work that needs to use it, and some friends planning bathrooms. Then I thought, HF is mostly China-made so I better nab one. The local HF was real friendly and the supervisor helped me load their 10″ saw and optional stand. The clerk at checkout felt I should “sign up for HF insider” and I’ll save you $70! I did and she did! And supervisor put the box on the self-lift cart, told the clerk, “don’t forget he gets a free tool” and pull out flyer and I also got the set of titanium drill bits. Did the Tariff news become a spur to spend? A fear monger chant? I love Canada (still need to visit BC, Sask, Alberta and Nova S.) and sorry automakers and syrup going up. But if tools go up, I’m set.
Oh, and I have heard of a great hardware store that is closed now, after 107 years. https://patch.com/pennsylvania/newhope-lambertville/finkles-closing-its-doors-lambertville-after-107-years-business
Oh I won’t get political but read my mind…I’ve not much left to “buckle” down.
MB
No that’s Harbor Freight and the “value added” sales model at work. The low price drew you in, the “Join the inside track and save even more.” line gave you another dopamine hit and you had a positive interaction with the staff. The “Don’t forget his free tool” adds another dopamine hit. Doing this, in short, means you’re more likely to come back to the store because of multiple positive experiences in a short amount of time. It’s psychology in marketing more than anything.
AJ
Despite the new tariffs being immediate, most tool suppliers give their retail buyers 30 to 90 days time before new pricing goes into effect. If some retailers raise their prices immediately, won’t customers likely just purchase tools from other retailers that haven’t yet raised their prices? In other words, those retailers that raise their prices prematurely risk missing out on sales.
Stuart
Except for clearances or special exceptions, I typically see most retail price changes go into effect at all authorized dealers at once.
Tariffs affect inbound inventory that hasn’t yet been processed via customs. Some companies increase prices on in-hand inventory. Larger brands with authorized dealer networks tend to set their prices and MSRP, giving retailers little room for unilateral changes.
I’m not sure we can expect some retailers to increase prices immediately if their competitors don’t, at least not for brands that have the sales volume where it would matter.