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Darth Matthew

Tariff could wreck the industry

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For those who haven't seen it:  

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Toys, board games and dice are on the list of Chinese imports that President Trump has proposed for additional tariffs of up to 25%. The list was released today by the Office of the U.S. Trade Representative. Trump proposed the tariffs after trade negotiations with China fell through on Friday.

Board games and dice are included under the subheading: 9504.90.60. “Chess, checkers, backgammon, darts and o/table and parlor games played on boards of a special design and parts thereof; poker chips and dice.”

Toys are under 9503.00.00. “Toys, including riding toys o/than bicycles, puzzles, reduced scale models.”

Public hearings on the proposal will start June 17. During this time companies and individuals can provide input on tariff levels to be imposed. Requests to exclude specific subheading will also be taken. The tariffs could be implemented any time after June 24.

 

 

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Depends on how the tariff is applied/worded. Developmental costs—including creating the moulds—are a huge amount of the cost of a game. Printing is a not insignificant, but not incredibly high cost, either. It may be possible for FFG to work it so the tariff only applies to the physical component cost. Plus, they already do some of their printing in the US, so no tariff on that stuff.

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11 hours ago, Xelto said:

Depends on how the tariff is applied/worded. Developmental costs—including creating the moulds—are a huge amount of the cost of a game. Printing is a not insignificant, but not incredibly high cost, either. It may be possible for FFG to work it so the tariff only applies to the physical component cost. Plus, they already do some of their printing in the US, so no tariff on that stuff.

The problem with the tariff is that it might put local shops out of business.  The margin on games is small, and if the distributors is paying 25% more, that gets passed on to the shop, and then on to the consumer.

Doesn't take much of a drop in sales to really impact your local shop.

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9 hours ago, Darth Matthew said:

The problem with the tariff is that it might put local shops out of business.  The margin on games is small, and if the distributors is paying 25% more, that gets passed on to the shop, and then on to the consumer.

Doesn't take much of a drop in sales to really impact your local shop.

The materials cost of the game—the part that gets imported—is relatively low. I estimated that cost at under $4 per large-box expansion (the ones that retail at $35). More of the actual costs are sunk costs of development—creating art, moulding (2 moulds needed for the big-box units), and, of course, developer payroll.

Depending on how the tariff is implemented, FFG may be able to have the tax limited to the pieces alone, raising their cost by about a buck and the retail cost by about $3.

Or, if the tariff is somehow on the full retail price and not just the pieces, I'm not sure how much extra it would cost to switch to a non-Asian supplier, but I don't imagine it would be enough to raise the price by a full 25%.

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The rhetoric is every product with a part manufactured outside our (the US') border.  To put it into perspective "washing machines" had a 20% tariff imposed on them and the ITC estimates a price rise of 12%.

The 25% would apply to all miniatures, dice and printed materials.  Miniatures and Dice are made in China, many of teh printed materials are made in China as well.  For instance if you look at the new LOTR Journey's game printed material it's labeled made in China.  So 100% of the physical product of that game is made in China.  I would expect to pay 25% extra on all items they have to pick up off the boat.  Depending on how FFG prices things there is also a margin baked in for development and profit.  So I dont think it would be unreasonable to see 80% of the tariff cost past on to the consumer.  I would brace my wallet for the full 25%, but hope it is as little as 20%.
https://www.nber.org/papers/w25767

I'm also less worried about FFG and more worried about FLGS' and independent Kickstarters.  Imagine you have funded a Kickstarter for a $X then you show up to the port to pick it up and have to pay $1.25X to get it off the boat b/c the tariff hit after your funding but before fulfillment.   Great

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2 hours ago, flightmaster101 said:

The rhetoric is every product with a part manufactured outside our (the US') border. 

OK, it is the full thing, then. Ah, well. Hopefully the democrats don't do anything stupid next election cycle, and this is all over in a year and a half.

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I'm also less worried about FFG and more worried about FLGS' and independent Kickstarters.  Imagine you have funded a Kickstarter for a $X then you show up to the port to pick it up and have to pay $1.25X to get it off the boat b/c the tariff hit after your funding but before fulfillment.   Great

Yeah, I'm far more concerned about independent game manufacturers than the major game companies.

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16 hours ago, Xelto said:

OK, it is the full thing, then. Ah, well. Hopefully the democrats don't do anything stupid next election cycle, and this is all over in a year and a half.

Yeah, I'm far more concerned about independent game manufacturers than the major game companies.

Yeah, they'll just increase the price and then won't bother lowering it once the tariffs are gone. 😉 

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LOL, in Illinois, we created “toll roads” in the 60’s and they were supposed to be removed after they were paid off in the 70’s.  Now we have electronic tolling so they can painlessly take our money and if you don’t use one of those devices, it costs double.  🤗

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income tax was imposed on people in many countries in the beginning of 20th century, to finance "last war".

It was never cancelled, but doubled or tripled. 

 

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8 hours ago, sarumanthewhite said:

LOL, in Illinois, we created “toll roads” in the 60’s and they were supposed to be removed after they were paid off in the 70’s.  Now we have electronic tolling so they can painlessly take our money and if you don’t use one of those devices, it costs double.  🤗

jfk-roads-statist.jpg

 

 

Speaking to the topic,  this is definitely a wait and see situation. I remember the alarmist reaction over aluminum, specifically as it related to the beer industry. While prices did increase, they were attributed to ingredients shortages and not packaging materials.  Tooling and labor are still the biggest slices of the board game manufacturing pie. Independent/KS creators may have less invested in tooling at this time and have a bit of flexibility.  FLGS still has more to worry about from online retail and keeping up with a market which has already exceeded the saturation point.  Maybe a little shrink or reorganization is good for the hobby, or at least the consumer. Half the time I finally get to play a game it's already considered old or it's been replaced by a game with  ̶s̶t̶o̶l̶e̶n̶ streamlined mechanics.

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What I'm worried about is my local game stores.

If many products see a jump up in price; we could see stores that operate on a small margin just not make it.

Losing game stores is losing a space pulling new people into the hobby.

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