Tariffs and the Price of Tools

[mino]

All this sucks for a consumer or a small business. The transient chaos is the worst part.

TLDR: I do not believe you will see much of that chaos with Festool.

For those unaware, the US is, historically, using (lower) tariffs for political influence. This is par for the course but it went mass-scale after the post-WW2 consensus of Breton Woods and related. The US bought political /and military/ control over "the Western World" in exchange for a favourable tariff regime for the other parties. In this, the US tariffs (regime) was entirely political all this time. Avoiding a notion of politics when discussing it is hard to impossible.

Either way, that political arrangement seems to be coming to an abrupt end, the US forcing a re-negotiation of those arrangements "on business terms".

What is important to say here, all this very much does not look a like a brewing trade war, 1930s style. Thankfully.

As for predicting a Festool (re) action, I believe we will not see them budge on their fixed retail pricing (in US) until after the dust settles. Then there is likely to be some adjustment, but nothing as abrupt as the full tariff percentage as service costs are not affected. This does combine with the energy prices crisis in Europe, so you folk may see a +20% eventually, but that would be cumulative, not just from tariffs ..

Even in Europe, with COVID disruptions and without a fixed pricing setup, they did not really adjust prices for the COVID/war inflation up until the SYS3 transition where it got "bundled in".

 

[ChuckM]

Tariffs or not, Festool increases its prices annually (except during one or two pandemic years).

Tariffs will make the next annual price increase bigger, I expect.

Buy your desired Festool as soon as you can afford it so you can start enjoying it. This advice applies to any toys, I mean, tools.

One exception to price increases is when a new competing tool comes to the market. When a DF500 clone or SawStop clone is released (their patents are said to be ending soon), prices will come down for them. Asian players like Grizzly and Harvey would likely have their new versions ready at competitive prices in addition to a new Bosch joiner or sawstop.

 

[woodbutcherbower]

Just a heads up ..................  the likely hood of this and similar discussions not going off the rails is slim. So please don't be surprised if the topic (s) get locked or disappear.

Seth

I don't think it will Seth - at least I hope not. Everyone's been very circumspect and restrained. But this is a Festool forum and Festool imports (along with many others) just got one-fifth more expensive. The implications of that are a fair and reasonable topic to discuss. But as always - you're the boss. I hope you won't have to get out your big stick.

Best wishes from the 10% UK.

 

[Packard]

When gasoline prices first spiked to first three dollar a gallon, then four dollars and finally (and briefly) five dollars a gallon, the 16 year old kid working as a pump jockey near my house said, “It’s never going below three dollars.  The big gas companies learned that people will buy gas no matter what the price is. And people got used to $4.00 per gallon.”

The kid was marginally wrong.  It was recently $2.97/gallon.  But the $2.79 of 2015, or the $1.50 of 2000 will never return, even it the cost of crude was cheaper than water.

 

[woodbutcherbower]

[member=57948]ChuckS[/member] $2.97 ?? [eek] [eek] [eek] [eek]

Gasoline in the UK is currently around $6.90 per gallon which translates to around $5.70 because US gallons are only 83% of our 'proper' gallons. Half of that goes straight to the UK Government in fuel duty and tax, and it's commonly perceived as their biggest 'cash cow'. But as you say - folks buy it because they don't always have a choice.

 

[Azheim]

This takes me back to 2005 when I first saw gas hit $2.50/gallon. As a poor kid, I told myself the prices couldn't stay that high forever, and just put 4 gallons in my '88 Pontiac Fiero, planning to fill up again when prices came back below $2.  Despite its small size and weight, the Fiero got terrible gas mileage, so a couple days later I reluctantly filled up my tank, still at $2.50. 20 years later and I'm still waiting for prices to come down.

I'm not planning to wait for prices to come down this time. Just pulled the trigger on the Dashboard PWS which I've been eyeing for a while. Hopefully Festool announces their price bumps well in advance, as they have in the past - I might use that to time some other purchases before year-end.

 

[Cheese]

Back in the late 60's/early 70's when I was way into street racing, the price for a gallon of Premium was around 35 cents. Yet that still seemed expensive considering a McDonalds burger was only 15 cents and a White Castle was only 12 cents. And if you purchased a sack of 12 White Castle's, they'd throw in the 13th for free.  [big grin]

"Buy em by the sack"

 

[Packard]

My Alfa Romeo would run on “regular” (except “Gulftane” from the Gulf stations.)  ESSO, the precursor to EXXON, was my preferred brew at $0.299/gallon for regular Gulftane was two cents cheaper but knocked like crazy.

 

[Packard]

More applicable to cars than to tools…

If the $50,000.00 car you had your heart set on, was bought two months into the tariff massacre, it would cost you $62,500.00.

Then a few months later they backed off the tariffs, you would have bought a $50,000.00 dollar car, but paid $62,500.

If you found that the car no longer met your needs, then you might owe more money that the car was worth in trade or re-sale.  That would make getting it replaced financially difficult.

 

[John T.]

Similar situation with buying a Tesla. They drop the prices randomly and your depreciating asset just took a big hit if you need to sell it. They've been doing it for years though so anyone buying one should be aware.

 

[tjbnwi]

Back in the late 60's/early 70's when I was way into street racing, the price for a gallon of Premium was around 35 cents. Yet that still seemed expensive considering a McDonalds burger was only 15 cents and a White Castle was only 12 cents. And if you purchased a sack of 12 White Castle's, they'd throw in the 13th for free.  [big grin]

"Buy em by the sack"

The first year I worked at my father’s service station premium was 32.9¢ per gallon.

During the oil embargo of ‘73/‘74 we had to sell gas by the 1/2 gallon because the pump could not be set for more than 49.9¢ per gallon.

The tariffs, do not bother me in the least bit.

Tom

 

[Crazyraceguy]

Back in the late 60's/early 70's when I was way into street racing, the price for a gallon of Premium was around 35 cents. Yet that still seemed expensive considering a McDonalds burger was only 15 cents and a White Castle was only 12 cents. And if you purchased a sack of 12 White Castle's, they'd throw in the 13th for free.  [big grin]

"Buy em by the sack"

From what I gather, I'm about 10 years younger than [member=44099]Cheese[/member] and I remember that well. There was a White Castle just down the street from the place my parents used to take us sledding in the winter.  There would occasionally be a coupon in the Sunday newspaper to get a dozen for $1! That's only 8 cents a piece.  Coffee was something like 25 cents?
Gas first went over $1/gallon in the late 70s. I was working in a Shell station, with the old-fashioned, mechanical, rolling numbers, gas pumps. Thet were not physically capable of charging 3 digit prices. Apparently, the manufacturers never dreamed that price would ever come?
They devised a work around that was ill-received. That was for the machines to display half of the actual price, while pumping the correct volume. This confused people, especially since that was a time where self-service was on the rise. Thankfully, it didn't last long, and new electronic pumps, with digital displays, were installed.
There were a lot of mad customers, who would pump $5 worth of gas, only to be told that they owed $10! Most of them thought they were being cheated/deceived in some way.

You used t be able to buy a doughnut and a coffee for less than $1 back then too. Now Sheetz acts like they are doing you a favor at $3.99

Yes, I realize that make me the guy who used to walk 5 miles to school, in the snow, with my little brother on my back, against the wind, up-hill both ways......but life was very different in the 60s-70s

 

[Crazyraceguy]

More applicable to cars than to tools…

If the $50,000.00 car you had your heart set on, was bought two months into the tariff massacre, it would cost you $62,500.00.

Then a few months later they backed off the tariffs, you would have bought a $50,000.00 dollar car, but paid $62,500.

If you found that the car no longer met your needs, then you might owe more money that the car was worth in trade or re-sale.  That would make getting it replaced financially difficult.

That sort of happened during the pandemic. Car prices went crazy, with dealers doing ridiculous mark-ups (calling it "market adjustment") That drove used car prices to the moon. I sold my '14 Camaro in July of '22 for $2000 less than I paid for it. Yes, that's an 8 year old car, only losing 2k. Of course, that's simplified numbers, not counting fuel, maintenance, insurance, etc
It was exactly perfect timing though. The market recovered very soon after that and thing got more reasonable.

I remember one particular Ford dealership doubling the sticker price on F-150 trucks. So, an already over-priced $74k truck was $128k.....insanity. I don't know that they ever sold any for that foolishness, but they advertised it on TV that way.

 

[Cheese]

I was working in a Shell station, with the old-fashioned, mechanical, rolling numbers, gas pumps. Thet were not physically capable of charging 3 digit prices. Apparently, the manufacturers never dreamed that price would ever come?
They devised a work around that was ill-received. That was for the machines to display half of the actual price, while pumping the correct volume. This confused people, especially since that was a time where self-service was on the rise. Thankfully, it didn't last long, and new electronic pumps, with digital displays, were installed.

For those that don't remember the old mechanical gas pumps, here's a meter panel from a Gilbarco "computer" pump as they were referred to at the time. This particular panel is from a 1949-1955 Gilbarco pump. Notice that the maximum price per gallon could only be 99.9¢.

Gilbarco still exists in some form as it's now owned by Danaher.
https://investors.danaher.com/2002-...f-the-Acquisition-of-Marconi-Commerce-Systems

[attachimg=1]

 

[leakyroof]

I was working in a Shell station, with the old-fashioned, mechanical, rolling numbers, gas pumps. Thet were not physically capable of charging 3 digit prices. Apparently, the manufacturers never dreamed that price would ever come?
They devised a work around that was ill-received. That was for the machines to display half of the actual price, while pumping the correct volume. This confused people, especially since that was a time where self-service was on the rise. Thankfully, it didn't last long, and new electronic pumps, with digital displays, were installed.

For those that don't remember the old mechanical gas pumps, here's a meter panel from a Gilbarco "computer" pump as they were referred to at the time. This particular panel is from a 1949-1955 Gilbarco pump. Notice that the maximum price per gallon could only be 99.9¢.

Gilbarco still exists in some form as it's now owned by Danaher.
https://investors.danaher.com/2002-...f-the-Acquisition-of-Marconi-Commerce-Systems

[attachimg=1]

  I remember moving into Dallas Texas in 1968 as a child.  We had moved up from the Gulf Coast area known as the Valley near the Mexican Border. I was finally at the age where I took notice of the price of Gas at the Stations near our house. I can remember a Fina Station with 29 cents per gallon back then.  Don't know why it sticks in my mind, but there it is,,,, [smile]
I think my Father even mumbled gas was high here in Dallas.... [big grin] [big grin]
Both he and his Father had worked for Oil Companies, prospecting for new fields/wells.  Grandfather was deep in the Mexico region back in the 1920s. Dad did it for a few years in the West Texas area after getting his Geology degree, then changed fields totally.

 

[Cheese]

We had moved up from the Gulf Coast area known as the Valley near the Mexican Border. I was finally at the age where I took notice of the price of Gas at the Stations near our house. I can remember a Fina Station with 29 cents per gallon back then.  Don't know why it sticks in my mind, but there it is,,,, [smile]
I think my Father even mumbled gas was high here in Dallas.... [big grin] [big grin]

I've never been able to figure that out... [eek] ...why would the price of gas be higher in Texas where the stuff is "harvested"?  As an aside, my neighbor worked as a pipeliner in Texas in the late 70's and he confirmed that gas was more expensive there than in Minnesota.

 

[thudchkr]

  I remember moving into Dallas Texas in 1968 as a child.  We had moved up from the Gulf Coast area known as the Valley near the Mexican Border. I was finally at the age where I took notice of the price of Gas at the Stations near our house. I can remember a Fina Station with 29 cents per gallon back then.  Don't know why it sticks in my mind, but there it is,,,, [smile]
I think my Father even mumbled gas was high here in Dallas.... [big grin] [big grin]
Both he and his Father had worked for Oil Companies, prospecting for new fields/wells.  Grandfather was deep in the Mexico region back in the 1920s. Dad did it for a few years in the West Texas area after getting his Geology degree, then changed fields totally.
[/quote]

I remember a Fina station by where we lived. We used to go there to get STP stickers to affix to our bicycle seats.  It was the first self-service station I can ever remember seeing.  The full service station across the street from it had gas at 25.9 cents per gallon while that Fina sold it at a whopping 17.9 per gallon.  That was in Salt Lake City.

 

[Stone Message]

In the UK and the European Union VAT is charged on sales. But, not many people understand how VAT works - it is an advantage to the businesses that make things to sell and it is not a tarrif. Let me explain....

If a company in (say) the UK imports products or raw materials from wherever but lets assume it is from the US. They will have to pay VAT on the value of materials or goods imported and in the UK that is 20%. That company then does something to the stuff coming in - it could be making something from it or even just re-packaging it for sale. When they sell it to the UK public they charge (and receive) VAT at 20%. So, the eventual buyer or user of the product pays.

VAT rules now allow the company to reclaim the VAT that they had to pay in the first place and only give to the Revenue the excess of VAT that the customer has paid. Therefore, the US company or importer of goods from the US have no penalty at all and VAT is absolutely not a tarrif.

In any accounting period the importing company just reckons up the VAT paid and the VAT recieved and either receives a reimbursement from the Revenue (if their VAT outgoings are greater than their VAT incoming from customers) or they pay the difference if the other way around.

Value Added is the key in the definition. If you take raw materials or a product and then move it on to a customer then it is only your Value Added amount that gets taxed. In most cases it is way below the 20% rate and often closer to 3 %.

Peter

 

[leakyroof]

We had moved up from the Gulf Coast area known as the Valley near the Mexican Border. I was finally at the age where I took notice of the price of Gas at the Stations near our house. I can remember a Fina Station with 29 cents per gallon back then.  Don't know why it sticks in my mind, but there it is,,,, [smile]
I think my Father even mumbled gas was high here in Dallas.... [big grin] [big grin]

  You misunderstood, or I did a lousy job  [wink]... Dallas was the new BIG city to us.. Gas was more expensive than it had been in the 'Valley', or Rio Grande Valley close to the Border. City Slicker prices... [wink] [wink]

I've never been able to figure that out... [eek] ...why would the price of gas be higher in Texas where the stuff is "harvested"?  As an aside, my neighbor worked as a pipeliner in Texas in the late 70's and he confirmed that gas was more expensive there than in Minnesota.

 

[mino]

In the UK and the European Union VAT is charged on sales. But, not many people understand how VAT works - it is an advantage to the businesses that make things to sell and it is not a tarrif. Let me explain....
...

It is no tariff as everyone pays it, not just importers. You are absolutely correct there. But "advantage" ?!?

VAT accounting is a very expensive/laborious, error-fraught and fine-fraught endeavour for any small/medium business. The only businesses that "like" it are the really big ones. And only because they benefit from the disproportionate administrative burden VAT regimes place on smaller competitors.

VAT regimes came to be purely to enable very high sales taxes without killing random inter-company trade in the process. A simple sales tax in the 10% range and more would just not work without a VAT regime. A VAT regime for a sales tax is the price to pay for enabling a high sales tax. And a high price it is!

To add, high sales taxes are so "popular" because they are so hard to avoid thus "easy to collect". They are also degressive (the poor pay more than the rich), so kinda useful for population control if you are an oligarch/nobility/etc. ruling over a European country ..

---

Thus the only people I ever saw talk of VAT as a "good thing" are macro-economists. I.e. the people who look at it in competition with income taxes, property taxes, etc. Even those people see its high cost of collection for the businesses as a major negative, so try to create various special regimes for small businesses to ease the burden.

But I have yet to meet anyone who would consider being a VAT sales tax regime "an advantage". It is the other way: living in a VAT regime country, and too small for running you own VAT accounting, you are penalised for being too small. In a bit of a Stockholm syndrome, one can see that as an "advantage" of those business who do the accounting. But it is nothing of the sort. There is nothing good about VAT. It is just the lesser evil than a "simple" (non-VA) sales tax. /VAT fraud aside./