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Trump, the dumbest man on earth, just doubled down on his dumb. (lemmy.ca)
submitted 2 years ago by to c/canada@lemmy.ca
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[–] 0 points 2 years ago (6 children)

Would you mind changing "instead of making, they make" by some other precise verbs? Your explaination seems very interesting but, probably du to my poor english, I feel like you saying the same thing over and over while changing the numbers and I can't grasp your explanation.

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  • [–] 1 point 2 years ago (5 children)

    So if a company still wants to make $2 profit per bottle.

    Company raises price to $6.25 to try to cover the tariff (25% increase)

    The tariff becomes $1.56 ($6.25 × 25%)

    Instead of selling for $5 price, they would sell it for $4.69 effectively ($6.25-$1.56)

    Instead of making $2 profit, they would make $1.69 profit ($4.69-$3(production cost))

    If they still sold the bottle for $5, paid $1.25 tariff

    They would make 75 cents of profit ($5-$3(production cost)-$1.25(tariff))

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  • [–] 1 point 2 years ago (4 children)

    I see. Since the tarif is proportionate to the final price, the final price needs even higher than the initial price times (1 + tarif) in order to keep the profit the same.

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  • [–] 2 points 2 years ago

    Starting Price / (1-Tariff %) = Final Price Needed to Break Even

    $5 / (1-.25) =

    5/.75 = $6.67

    If an item was $5 and there was a 30% tariff

    5 / (1-.30) = $7.14

    If there was a 30% tariff and the syrup company wanted to keep same profit they would have to sell each bottle for $7.14.

    $7.14 × .30 = $2.14

    $7.14 - $2.14 = $5

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  • [–] 2 points 2 years ago (2 children)

    No, because (1 + tariff) isn't enough to keep up with the tariff because as the price goes up, the tariff also goes up.

    Like in the example going from $5 to $6.25 (5 × (1+.25)). Would result in 31 cents less per bottle.

    It needs to be ~33% more or $6.67 for the syrup company to keep the same profit with a 25% tariff.

    Final Price × Tariff % = Tariff Amount

    Final Price - Tariff Amount = Cost of Good Sold

    Cost of Good Sold - Expenses = Profit

    So if you need $2 profit

    $2 = (Final Price - (Final Price × Tariff %)) - Expenses

    $2 = (X - (X×.25)) - $3

    $5 = X - .25X

    $5 = .75X

    X = $6.67

    Formula would be

    Profit = (Final Price - (Final Price × Tariff %)) - Expenses

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