A stark message for North American modellers

[grumbeast]

Hi All,

 Just had this posted on my feed, pretty scary stuff for the future of Model Railroading in North America.  If someone like Bachmann went down I wonder how it would affect Bachmann UK?

[Chris Morris]

That's very sad. Hopefully these huge tariffs won't last long. These businesses can't last long if they have to find large amounts of cash for tariffs before they can get more stock into the country while they have their income stream reduced because modellers can't afford to pay post tariff prices.

[Steven B]

And from Rapido Trains with input from Bachman US, Kato US and several other US companies:

https://youtu.be/fH_ejJaqxE0

Bachmann US is part of the same Kader Industries as Bachmann UK, Farish and EFE. If there's a reduction in models flowing to the US for the next 4 years then what chance of those production slots being given over to new or re-runs of Farish models?

[class8mikado]

Indeed its an Ill wind, but a stiffled US demand on Chinese manufacturing may result in capacity and i dare say lower costs for Europe bound goods. Does China see Bachmann as a European or American company ? 

[Newportnobby]

Could someone not set up offices/warehouse in Canada and order/import from China from there?
OK, there are tariffs between Canada and the USA but only 25% as opposed to 150%.
Asking out of pure ignorance

[PLD]

Could someone not set up offices/warehouse in Canada and order/import from China from there?
OK, there are tariffs between Canada and the USA but only 25% as opposed to 150%.
Asking out of pure ignorance

Depending on which source you believe, DT's new rules mean if goods pass through a third country before reaching the US either you pay the HIGHER of the two tariff rates or you pay BOTH... 

[Richard @ N'Tastic Scale Models]

Could someone not set up offices/warehouse in Canada and order/import from China from there?
OK, there are tariffs between Canada and the USA but only 25% as opposed to 150%.
Asking out of pure ignorance

This was the argument for putting tariffs on unhinabitted islands to shop companies trans-shipping through low or zero tariff zones, hence all the penguin jokes. My understanding that substatial changes / work has to be done in second country to get lower tariff. One option could be to ship unboxed / unassembled parts to US and have a finishing / assembly line as the tariff on parts with lower value would be less. But you then need to setup and train a workforce for that roll when you already have one. You will also have more wastage with damage in transit and staff training / bedding in. So cost will rise anyway. The hobby won't get a special excemption as every industry / sector will plead the same we are special, it will only work for things close to Trump and his team, so perhaps theirs a modeller in his camp it might work.

[The Q]

While warehouses can't function across the border,I suspect that model shops in Vancouver, on the west coast and Toronto /Montreal/ Ottawa towards the east plus any in between near the border will get an increase in cross border visitors wanting stuff for personal import below the personal tax level which I believe is $800.

[grumbeast]

While warehouses can't function across the border,I suspect that model shops in Vancouver, on the west coast and Toronto /Montreal/ Ottawa towards the east plus any in between near the border will get an increase in cross border visitors wanting stuff for personal import below the personal tax level which I believe is $800.

Not sure that will work as many of the Canadian shops (and there aren't that many) use US distributors anyway, such as Walthers.  You're not importing directly from China if you're a Canadian company selling say BLI or Bachmann, your likely getting it from the US company direct.  So I see Canadian prices being affected by both the US tariff on China, PLUS potentially any Tariffs we 've imposed on the US, plus the weak Canadian dollar will increase that cost to Canadian consumers AND US consumers buying from Canada

All pretty messed up stuff

[bigdawgks]

While warehouses can't function across the border,I suspect that model shops in Vancouver, on the west coast and Toronto /Montreal/ Ottawa towards the east plus any in between near the border will get an increase in cross border visitors wanting stuff for personal import below the personal tax level which I believe is $800.

Not anymore. That exemption just ended.

[bigdawgks]

Could someone not set up offices/warehouse in Canada and order/import from China from there?
OK, there are tariffs between Canada and the USA but only 25% as opposed to 150%.
Asking out of pure ignorance

This was the argument for putting tariffs on unhinabitted islands to shop companies trans-shipping through low or zero tariff zones, hence all the penguin jokes. My understanding that substatial changes / work has to be done in second country to get lower tariff. One option could be to ship unboxed / unassembled parts to US and have a finishing / assembly line as the tariff on parts with lower value would be less. But you then need to setup and train a workforce for that roll when you already have one. You will also have more wastage with damage in transit and staff training / bedding in. So cost will rise anyway. The hobby won't get a special excemption as every industry / sector will plead the same we are special, it will only work for things close to Trump and his team, so perhaps theirs a modeller in his camp it might work.

The labor costs for assembling products in the US will offset any savings on tariffs. You can't pay US employees the same rates as Chinese factory workers.

As for exemption of model trains, there's some precedence there. The previous policies recognized that the US has never had a comparable model train industry to the foreign manufacturers, so there was never any real domestic competition (and there certainly won't be any now). If the current administration is smart enough to understand this (which is dubious) then there's grounds for that industry and similar specialty industries to be exempt. But of course with how aggressive the changes have been it's looking like too many government officials have been drinking their own Kool-aid so to speak.

[jpendle]

Indeed its an Ill wind, but a stiffled US demand on Chinese manufacturing may result in capacity and i dare say lower costs for Europe bound goods. Does China see Bachmann as a European or American company ?

I would expect that China sees Kader (owner of Bachmann et al) as a Chinese company.
Kader are already loss making, if they lose all their sales in the US then there's a chance that they'll go bankrupt.

I would expect that prices for Chinese models will go up, rather than down, as the various factories try to make up for the loss of the US market.

And also as one of a number of expats over here waiting for parcels from suppliers in the UK the devil is in the detail.

Following the Secretary of Commerce's notification that adequate systems are in place to collect tariff revenue, President Trump is ending duty-free de minimis treatment for covered goods from the People's Republic of China (PRC) and Hong Kong starting May 2, 2025 at 12:01 a.m. EDT.

The Secretary of Commerce will submit a report within 90 days assessing the Order's impact and considering whether to extend these rules to packages from Macau.

I'm no expert but the optimist in me thinks that postal shipments from UK retailers will still be eligible for the $800 de minimis exemption.

Hopefully I'll know by the end of the month.

Regards,

John P

[Webbo]

Hello folks

Further to this issue of tariffs here is the first page of the Broadway Flyer the newsletter of Broadway Limited Imports (BLI). Note, this page has been trimmed by me.  It is a succinct statement of what these tariffs mean to the purchase of railway equipment in the US. The threat to the hobby in the US may be a threat to us all as has been pointed out. I originally posted this on maridunian's thread Mwynwr Tryciau Colliery - the Many Tricks Mine, but I think it belongs here.

Webbo


The Broadway Flyer: April 2025
 
An update on tariffs:
Below is a message from our President and CEO Bob Grubba,

Dear Customers and Industry Partners,

In April, the U.S. government imposed a 145% tariff on model trains imported from China—products that had previously been tariff-free.  Broadway Limited wants to provide you with a clear explanation of what's happening, how it affects you, and what steps we're taking in response.

A tariff is a tax collected by the US government from US companies when we import a product.  Trains from China now have a 145% tariff, meaning a $200 model would have a tax of $290, making our total cost $490.   BLI can absorb some of this, but the retail price would still rise by 80%, meaning the retail price for an HO diesel would rise from $375 to $670.  An HO Big Boy would rise from $849 to $1,500.  We believe that if tariffs are left at this level, the model train industry in the US will be wiped out, including all manufacturers, distributors and hobby stores. 

BLI started manufacturing in Vietnam 6 years ago, but the process is slow. We now import 1/3 of our product from Vietnam, which only has a 10% tariff.

BLI would like to manufacture in the US, but many of the molds and components are not available here, and since the tariffs were implemented at such a high rate with almost no warning, we will be bankrupt before we can start production. For Broadway Limited, this means our 25 year old company will close and our 15 employees in Ormond Beach, FL will lose their jobs permanently.
 
How can you help?

Broadway Limited would like our government to negotiate with China to eliminate unfair trade practices without destroying the model train industry.

Congress has the power to negotiate tariffs. Use the links below (not shown here) to contact your senators and representative asking them to reduce these tariffs to a reasonable level and implement them gradually to save our hobby and the jobs of American workers employed in the industry.

BLI is part of the Hobby Industry Coalition. See the video produced by our fellow model train manufacturers HERE and visit http://hobbycoalition.org/ to find out more about how the industry is working together to solve this issue.
 
Thank you for your continued support. We urge you to continue pre-ordering our products. Since the tariff situation changes daily, we will continue to announce products at their regular MSRP and will increase prices as needed when the products clear customs. You will be able to cancel orders if the tariff is still in place when the product arrives.

[Chris Morris]

I expect arrangements will be made in order for all companies selling model railway items in Canada to import direct from China. This may help a little but the big market for model railways is the USA. The Kadar factory in China will have all the overheads of running a business big enough to support the USA marketplace, if that market disappears, even for a short time, they may well struggle. In the short term it may well be that getting things made in China for the UK/European market may be easier. Long term it is probable that tariffs will reduce but what irreversible damage will have been done in the meantime?

We would miss Farish very badly if Kadar decided to cease trading so I hope the current situation in the USA is a short blip rather than a long term change.

[Chris Morris]

Have you noticed that only goods and not services are mentioned with regard to this trade imbalance in the USA? Just think every Windows licence, every bottle of coke, every piece of KFC etc etc sold around the whole world earns a licence fee which goes to the USA. I expect the USA earns a lot from financial services around the world as well. If services were taken into account the trade imbalance picture would look very different although I doubt it would make much difference so far as trade with China is concerned.