Bonna case price hike

[hornbuilder]

50% Tarrifs on product from Brazil have just been announced. If you're in the market for a Bonna case, get to it, because they're about to become considerably more expensive. Effective August 1st

[tbdana]

Ah, the Bolsonaro tax. We pay an additional 50% tax because our president doesn't like that Brazil has charged its own former leader with corruption crimes. Somehow, me paying a huge markup on my trombone case will force the Brazilian government to drop the charges. Makes perfect sense to me.

[hornbuilder]

And now 30% on EU effective Aug 1 as well. So if you're wanting anything from Europe..

[ghmerrill]

These things come and go. There are a lot of different dynamics going on here. I wouldn't rush to buy anything now just based on tariff speculation, until there's time for this to all settle out and see what will happen over the next few months. Just breathe deeply and wait for a while.

It's like trying to decide on what stock trades to jump into based on today's or this week's VIX. Unless you actually want to specifically trade the VIX (which can be pretty exciting), the best thing to do is kick back and see where it all ends up. The VIX, by the way, has actually been in a downward trend over the past three months. So acting before it "went up even higher" at an early point might not have been a good decision. This is maybe not an entirely strong analogy, but there's a lot of similarity in the reasoning involved. And of course a lot of the VIX upward movement (often referred to as the "fear gauge") was based on what were then perceived tariff threats that people later decided were overblown. Just some thoughts ...

Personally, I'm not about to speculate on how issues about tariffs that are currently being kicked around will affect the price of Brazilian trombone cases in, say, 3 to 6 months -- given what we've already seen about some of the resolutions. But since I don't want to spend that kind of money on a case anyway, I don't really have a dog in this fight.

[hornbuilder]

We'll see that's the thing. I do have a dog in the fight. And all this crap makes running a business incredibly difficult. I have clients who have ordered Bonna cases to go with the instruments I'm making for them. Bonna have a delivery schedule of around 4 months from date of order. How am I supposed to quote them a price? I know one dealer who just put in an order for $20,000 worth of Bonna cases. That order will now be closer to $30,000 with the Tarrifs. What if his clients say "sorry, I can't justify that"? He is left holding the bag. Then if the Tarrifs drop back, he has stuff that he has paid the Tarrifs on, how much is he supposed to charge for that? If he cancels the order, that's $20,000 that Bonna was counting on, longer coming in.

Yeah. It's nice to be able to say you don't have a dog in the fight. But there are plenty of people who are absolutely being hugely affected by this.

[BGuttman]

This has been my complaint about this arbitrary and capricious policy. Businesses need to have some kind of consistency in order to plan supply needs. When prices can be this volatile due to varying tariffs it's hard to plan.

[ghmerrill]

Yeah. It's nice to be able to say you don't have a dog in the fight. But there are plenty of people who are absolutely being hugely affected by this.

But isn't an effect simply passing on the potential cost of the item to the customer -- who can be notified of this increase prior to delivery and so decide to cancel the order? Sure, I understand that you may lose some sales, but some of that will be temporary and some may be permanent.

[hornbuilder]

Bonna charges their price, which is known at the point of making the order. That price includes shipping. When the parcel lands at customs to be cleared is when the Tarrifs are charged by the US Customs. It is not Bonna are charging the Tarrif.
How much is that fee going to be? Considering their delivery is 4 months out. Will it still be 50% in 4 months time? Or will the Tarrif rate change? Higher? Lower? Who knows! Will he delay the Tarrifs like he did before? Again. Who knows?
Can you refuse receipt of the goods? Sure! But it isn't as simple as that. Google "what happens if I refuse to accept an international parcel".
There have also been examples of taxes being charged on the shipping costs, at what appears to be a variable rate, above the Tarrif percent.
So yes, I am saying that I would be obliged to pay the 50% (or whatever the rate is at that time) Tarrif. This is not a simple cut and dried situation. Tarrifs are meant to protect a local industry from being undercut by cheap imports. There are no US case makers producing an equivalent product.

[hornbuilder]

Some of my above reply is in response to your comments that have been edited out.

[ghmerrill]

So yes, am saying that I would be obliged to pay the 50% (or whatever the rate is at that time) Tarrif.

So it sounds like the prudent thing to do would be to cancel your orders pending some outcome of the tariff issues, and inform your customers that given the proposed tariffs you would simply be unable to meet your previous cost quotes to them. I would hope that you're not really planning on taking delivery (particularly since it appears the items haven't even been shipped yet?) and eating the tariff cost. Are you?

[JohnL]

It's like trying to decide on what stock trades to jump into based on today's or this week's VIX.

Except that we're not talking about trading stocks. We're talking about buying a case to carry a trombone in. If someone already wants a Bonna case but has been putting it off, there's very little downside risk to buying now rather than waiting a few months. The price may not go up, but it's extremely unlikely to go down any time in the near future (if past history is any indicator).

[hornbuilder]

No, I would not eat the tarrif cost. That is entirely unsustainable. Particularly since I sell Bonna cases at very competitive prices! (Note. I order/sell them to my clients who are buying an instrument from me. I don't want to go into the case selling business. Too much money tied up in inventory)

Thank you JohnL. I was going to type a similar reply, but you worded it much better than I was going to.

[ghmerrill]

If someone already wants a Bonna case but has been putting it off, there's very little downside risk to buying now rather than waiting a few months. The price may not go up, but it's extremely unlikely to go down any time in the near future (if past history is any indicator).

I can't argue with that. But any such transaction depends, for its ultimate goal, on being finalized, including clearing (well, at least arriving at) customs in the US, prior to tariff imposition. Given the time frames being talked about, is that actually possible? I guess it is in terms of air shipping times (is there added cost there?). But does the inventory exist to provide the product in that time?

I confess that I'm highly skeptical that these tariffs are going to be imposed for any length of time -- at least on products like trombone cases. But if you're desperate for a Bona case, then buying now -- assuming there is product to buy -- isn't unreasonable.

[hornbuilder]

These Tarrifs are sweeping, in that it isn't just trombone cases specifically. It is "anything" from Brazil (or any BRICS member country for that matter) Same with the newly announced 30% Tarrif on the EU. That will mean MINIBAL ball joints, the water keys and spanner braces I use will be noticeably more expensive. Also, nickel silver is no longer milled in the US. It comes from Germany, China or India, all countries that have varying Tarrifs, making supply and price of that alloy more expensive and harder to come by. I've only talked about trombone specific items here, but these Tarrifs cover MANY more aspects of our everyday lives. For no valid reason.

[ghmerrill]

For no valid reason.

Well, this is debatable (and is being debated), but I won't argue the point here. From my own perspective, I see the strategy, and I see that in some respects it appears to be working (depending on what you take the goal(s) to be). It is not a strategy that I favor, but I do see the motivation for it; and I think that some of the narrative being used to support it is mistaken and misleading (which detracts from understanding its functionality). But I also think that the effects will be (and in fact are intended to be) temporary. Time will tell -- and hopefully, that will be a short time. I don't think that it can be a long time. But we'll see.

And believe me ... I also understand the effect this can have on small businesses (more than large ones). I've been in a position of seeing a small business fail, and subject to what the effects of that are.

[hornbuilder]

Gary
Do you know why these specific Tarrifs have been put on Brazilian imports? Read Dana's reply after my initial post. This is NOT what Tarrifs are for!!

[BGuttman]

At the risk of treading into politics, much of the Tariff policy is not economic per se but intended to be punitive. Also, according to the US Constitution, tariffs must be imposed by Congress, who seem to be noticeably absent.

Tariffs were originally intended to protect domestic businesses from foreign competition, but in this case (as well as many others) there is no domestic manufacturer to protect.

[ghmerrill]

Gary
Do you know why these specific Tarrifs have been put on Brazilian imports? Read Dana's reply after my initial post. This is NOT what Tarrifs are for!!

Yeah. I was responding to the broader issue of the tariffs and their use and effects -- and in part to the general view of "what tariffs are for" (which I think is frequently an unjustifiably narrow view). In the specific case of Brazil, there definitely seems to be a running off into the weeds, in terms of purpose and justification, that just appears incoherent. But again -- as a practical matter -- I think that as a result of this, we'll see the situation dissipate in fairly short order either simply in terms of practical aspects, or as we see our system of checks and balances swing into effect. Realpolitik is always fascinating to watch, as it's exposed, and as we were previously taught by Henry Kissinger -- although I'm not sure that this Brazil situation counts as genuine Realpolitik.

[ghmerrill]

Tariffs were originally intended to protect domestic businesses from foreign competition, ...

People keep repeating this, but it's simply not true historically. Even Wikipedia acknowledges this explicity and cites specific sources. The current mantra that tariffs were just "intended for" protection of domestic businesses is simply inaccurate. But even if it were true, it doesn't follow that tariffs could/should not be used for other purposes. However, please at least note that one of the classic purposes of tariffs is to "reach reciprocity agreements that reduce trade barriers" and thus to promote increased international trade.

In the current context, it may be worth noting that other sources cite an historical purpose of tariffs to be to "exert political leverage over another country" (Investopedia) or as a "political tool for negotiations" (Oxford Economics).

That's history and facts -- not politics (although there were a lot of politics in the history), and not popular opinion repeated on the web.

Another thing people might want to check on is the now oft-repeated claim that Congress must approve tariffs and the President can't impose them on his/her own authority. It's not that simple. But check it out by yourself. It only takes one or two searches to find the expanded tariff powers given to the President by Congressional legislation -- the consequence of which is that it isn't necessary for the Congress to approve each individual tariff.

[Posaunus]

Some examples here of "Don't distract me with facts!"

[tbdana]

I personally don't care about the politics, except insofar as I think some of the decisions are incredibly stupid and irrational and harmful.

But it has definitely chilled my intent to buy another Bonna case right now. They are already very expensive. To add another 50% (or whatever) tax on top of it puts it out of reach for me, and the uncertainty is not something I'm willing to deal with. So, for the foreseeable future I'll just get by with the soft gig bag I already have for that horn.

I doubt I'm the only person who thinks this way.

[tbonesullivan]

I personally don't care about the politics, except insofar as I think some of the decisions are incredibly stupid and irrational and harmful.

But it has definitely chilled my intent to buy another Bonna case right now. They are already very expensive. To add another 50% (or whatever) tax on top of it puts it out of reach for me, and the uncertainty is not something I'm willing to deal with. So, for the foreseeable future I'll just get by with the soft gig bag I already have for that horn.

I doubt I'm the only person who thinks this way.

No, you aren't. I had been thinking of getting a Bonna Case, or something, that I could use for whatever horn I am currently using. Maybe even a tenor/bass case so I could carry both. Now my options are far less.

But... at least I don't have some expensive custom oboes on order from Europe and elsewhere, which have a 1-2 year lead time. I can only imagine how this is affecting that market.

[Wilco]

Yes, this really sucks for everyone. But the business owners face the biggest risks by far!

[Kbiggs]

Tariffs were originally intended to protect domestic businesses from foreign competition, ...

People keep repeating this, but it's simply not true historically. Even Wikipedia acknowledges this explicity and cites specific sources. The current mantra that tariffs were just "intended for" protection of domestic businesses is simply inaccurate. But even if it were true, it doesn't follow that tariffs could/should not be used for other purposes. However, please at least note that one of the classic purposes of tariffs is to "reach reciprocity agreements that reduce trade barriers" and thus to promote increased international trade.

Yes, historically tariffs serve a dual purpose: to encourage national commerce within one country, and to put other country’s goods on an equal footing with said country. The issue with tariffs, though, is they impose an additional cost (perhaps we can call it a tax?) people or businesses in the consumer cycle.

With international trade being what it is, everyone in the US, and many people outside the US, will be affected by these tariffs. Matthew may be unable to find a source of nickel silver, an essential part of his products. He may find a source, but have to pay 20-60% more for it than he has budgeted. He has quoted a price of $XXXX.XX dollars to his customers, but when his cost to produce his product increases by even 5% overall, that means he either charges the customer more at time of delivery to make up the cost (bad business practice), or he has to find savings elsewhere in his business.

What is particularly galling is that, while for most of the 20th and 21st century business and commerce have come to rely on government to provide stability predictability to the economy and to markets, we now have an individual who is not a student of history, is not concerned with how his policies affect people other than those like him, and is—to all appearances—interested only in using policies and people to increase his wealth and power, and is more than willing to sacrifice the health, welfare, and wealth of a vast majority of the electorate (your guess as to how much, but I’d put it at 90%).

Where in the cycle of commerce is the tariff paid? Or, who ultimately pays for the cost of implementing a tariff? The consumer and the business that sells that product/service to the consumer. That applies to the entire cycle of commerce: manufacturer to distributor, distributor to wholesaler, wholesaler to retailer, etc.

Why must everyone pay more for these good and services? In this case, it’s because one ignorant, angry, and hateful man said so.

Trump is not interested in using tariffs as a political tool for negotiations to help increase the strength and value of American goods abroad. Given the arbitrary and capricious way in which these tariffs have been announced and implemented, and the instability of the individual proposing them, the most reasonable answer is that he is interested in acquiring more wealth and power, and he is using this political tool for negotiations so he can increase his own wealth and power, and the wealth and power of those around him.

Yes, Congress must approve these tariffs. Given the track record of the Republican Party in this 119th session of Congress, I think we can expect that any tariffs Trump sends to Congress for approval will be rubber stamped.

[ghmerrill]

https://www.congress.gov/crs-product/R48435

[wayne88ny]

If you want a Bonna Case and you're ready to buy it now, there's some in stock at

Horn Guys
Dillon Music
Hickey Music
Chuck Levin
Houghton Horns
Brass Exchange (used)
Canadian Brass Store
Park Avenue Music Center

[pfrancis]

Also, a few at Baltimore Brass:
https://www.baltimorebrasscompany.com/c ... cases.aspx