The commentators and business specialists all agree, the U.S.A. looses and prices will skyrocket. The people who know all about everything only tell one side — the bad side for everyone alerts to bad news quickly. Seldom is good news newsy.
Here is the crux of the matter: We have exporters and importers everywhere doing their job of buying and selling at a profit. At my first sales meeting it was established that “the world is for sale and needs a salesman.” Basic, yes! Now a sales tax is demoralizing for it is tacked on at the tail end of the sale. So, a $5 item is not $5, as the sales clerk says, it is $5.38! You have been reprogrammed to “price up” for tax.
Now tariffs are applied at the beginning of the cost. So, let’s say wheel nuts are $2 each. The importer orders one million, that is $2 million. This is called base price. Now a 5% tariff is applied and the base cost has risen to $2.10, or $2,050,000. The base cost has risen by $50,000.
If you are a good businessman importer, you are not going to pay $50,000 surcharge. You are going to bargain down the base cost, somehow, someway. Therefore, the exporter will adjust his base-selling price to get the order. No one knows but the exporter what his exact cost is. Nevertheless, the base price will go down. Therefore the exporter is the one who has to share the loss with the importer.
The exporter knows his wheel nuts can be made in the importer’s nation or other sources that can really adjust the baseline drop quickly. What? You mean a communistic nation such as China is profiteering! Yes, there is profit and loss in every transaction in the world. Always has been. No business anywhere can survive on loss only. Look at large retail stores nationwide going out of business. Why? They cannot survive on loss only.
Do not think these business basics are taught in schools today. Nor when I was in high school or college. The business world teaches quickly or you do not survive.
Take the stock market. Everyday it is shouted on the air: Stocks are up or down. The big news is when it goes down. Losses they exclaim. What every business man knows is the stock market fluctuations are a result of profit taking and profit making. Unload a billion shares, the market goes down and in time readjusts as market goes up. When it exceeds a certain level, an investor unloads a billion dollars of stock that has earned a profit since he last flooded the market. Ups and downs are just business. Not the commentators remarks that cause stock market falls. Profit — cannot live without it, no business, nor any nation. This is why governments fail, spending future profits is a disaster. It is said that every nation will eventually run out of money.
Ralph Z. Bell is a Lake Placid resident. Guest columns are the opinion of the writer, not necessarily that of the Highlands News-Sun.