I'm not going to get into the politics of economics and why the new president is enacting tariffs against our most valued trading partners but I will say that this rush to tariffs is going to have unexpected consequences everywhere, for everyone. Today I'm looking at it from the perspective of a consumer who likes to buy products from manufacturers in Japan, Germany and various other countries. Straight from the horse's mouth we know that tariffs are going to be enacted against the E.U. as well as our Asian trading partners, and it's just a matter of time before retail customers here see prices jumping up by 25% and more. Without commensurate increases in average incomes.
You thought Leicas were expensive before? Wait till tariffs add a couple thousand more dollars to the final bill you might pay! And then extrapolate that across lenses, batteries, filters, tripods, and, well, the whole infrastructure of your profession or hobby.
I bought another (used) SL2 last as a hedge against my own desire to buy something new like an SL3-S. I'm not ready to buy an SL3-S right now. Don't need one yet. Might never need one. But I do like to have cameras that travel in pairs and I figured that people would be rushing to upgrade from their SL2 cameras, trading in older models for the latest. Two SL2 cameras satisfies my buying need in the moment while saving me about $3,500. If I waited too long and missed the pre-tariff window I felt sure that used prices on used Leicas would rise once new cameras got hit hard with inevitable price increases. The older, but still great performing, SLs, SL2s, and SL2-Ss, available used, would suddenly seem like great bargains compared to the prices of newly imported cameras and the market run on the older ones would proceed with vigor. I paid $1995 for a very, very clean SL2, in the box with all accessories and a warranty. I can only imagine that when the USA government passed (at a minimum) a 25% tariff on German consumer goods (Leica included....) bumping the price on an SL3 from around $7000 to around to $8,750 many people in the market for a well made, new German camera will have hit their limit and walk away. One can only rationalize so much...
But it's not just Leica users who will feel the pain. There are really NO mass market camera makers in the USA and that means just about any camera brand you are interested in will be similarly affected. Add 25% to the top of the line Sony or Nikon cameras and see what happens to sales numbers. Suddenly cameras won't be quite as hard to find on the dealers' shelves but equally suddenly many previous potential customers might find themselves priced right out of the market for a new camera. Or at least the aspirational camera they had really hoped to acquire.
This all happened last time there was a tariff on camera products here in the USA. Prices of used gear, stuff not subject to the new tariffs, went up a lot. Great, recent, used products became much more scarce. Some consumer demands went unmet.
After swim practice today I was reading economic news from around the word and it seems that my thoughts just above are not in any way outlying conjecture. After breakfast I walked out to the office and promptly ordered one more SCL-6 battery (useable in all SL models as well as the Q2 and Q3 cameras) from a favorite retail camera dealer. The battery is currently about $200. I think it's expensive at that price but I'll think it's really expensive at $250 and, I know I'll want one or need one for upcoming projects. A handful of more powerful batteries goes a long way to lightening the load out for solo projects versus hauling extra less powerful batteries. And newer batteries are going to last longer than the old ones floating around the studio.
If I were in the market for a car I definitely wouldn't wait until the tariffs kick in to go shopping. Sure, you might be able to stomach an American brand but if you have a specific German or Japanese model in mind you might find yourself gulping at the pricing after the financial shit hits the fan.
Of course the best position to be in is not to need or want anything, product-wise. If you don't have to or want to spend the money I guess you are ahead of the curve. Until you consider inflation.....
A little stockpiling can be a good thing. Especially if you know that the combination of returning inflation and tariffs are heading your way. The dollar is strong right now...stock up.
Your Leica batteries are, like mine, probably made in China and may be subject to the 10% tariff. My Canon batteries are made in China as well. Trump imposed tariffs upon German lenses in his first term, but not on German cameras or Portuguese lenses also branded as Leica. Trying to outguess the current trade mess could lead to shortages of goods that will never be subject to any tariff as well as panic hoarding of goods that really make little sense; remember the toilet paper shortage of 2020? On the other hand, the tree hugging prime minister of Canada is talking about placing a 100% tariff on all imported Teslas. It is a costly guessing game.
ReplyDeleteAnd, of course, it turns out you were wrong on just about everything you wrote. The Chinese got hit with 140% tariffs, German cameras and lenses are now included in the tariffs, the prime minister of Canada is not a tree hugger. Elon Musk richly earned his 100% tariff on Teslas. And it's not a guessing game because Trump comes with precedent. Leica SCL-6 batteries shot up from $200 to $385 after the tariff announcements. God help us from the right wing enablers and their disturbing butchering of facts. June 13
DeleteHow to preserve your buying power in hyperinflation times:
ReplyDeleteConvert your price list to some stable currency. Swiss franks, yen, whatever. Everyday, convert the list back to the present dollar value and use it for new jobs or to correct outstanding dues (make sure your contracts include this correction). Back in brazilian hyperinflation days (1970-1990's), this is what autonomous workers used. Salaried workers were screwed.
My guess is that the Mexico tariffs will cause the most pain, with Canada close behind. We will see the price of already high priced domestic cars and produce rise a fair amount. We might see layoffs if parts prove too expensive for auto manufacturers, and we might see layoffs from retaliatory tariffs on our goods. Then there is Elon, who apparently thinks he is in charge of everything, and can do whatever he wants, because Twitter. People need to stop rolling over. Enjoy your "administrative leave" vacation as everything falls apart. You will be called back to work. For the rest of us, if you aren't organizing with a local group, it's not too late to start.
ReplyDeleteSome of my Leica batteries were made in Japan, some in China and some in S. Korea. Not sure who is going to get hit with big tariffs this time but it's better to be prepared than to be scrambling. The one thing I disagree with about is your characterization of the PM of Canada as being "a tree hugger." Since when is an honest concern for environmental issues a bad thing?
ReplyDelete"Straight from the horse's mouth..." I think you might have the wrong end of the horse there, boss. The Wall Street Journal featured a headline yesterday that said, "The Dumbest Trade War in History" followed up today with, "The Dumbest Trade War Fallout Begins." I'll be very curious to see what the stock market reaction is tomorrow. And if it's negative, I don't think the tariffs will last long. I hope, I hope. If they do last for a while, and even expand, the camera industry seems almost uniquely positioned to get hurt. I was trying to think of a single camera-related product made entirely in America. Maybe some camera bags? I think the UPStrap was, but I don't think that's made anymore.
ReplyDeleteWell that was quick: Mexican and Canadian tariffs have just been "postponed". And just wait until someone figures out that Chinese electronics are often filled with components made by the likes of Texas Instruments.
ReplyDeleteJeff in Colorado