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Yuneec and new import taxes?

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Hi,
Has anyone heard if the new import taxes apply to Yuneec products? When I see Fry's ads offering Yuneec drones as clearance items, Skyview Goggles for $40 and the Breeze for $100 it makes me wonder if Yuneec's profit margin makes doing business in the US worthwhile. I understand that something has to be done to make up for the recent business tax reductions but these new taxes don't seem to be the answer. And, are American drone manufacturers ready to fill the void?

Edit: I said tax deductions when I meant reductions
 

PatR

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Perhaps there's some confusion in how taxes work, and the difference between taxes, import tariffs, and market forces.

Tariffs are imposed when when a nation state and it's manufacturing base participates in unfair business practices in selling exported products in other countries for less than they cost to produce, or when businesses in the originating countries receive tremendous amounts of revenue from their government to underwrite their businesses, removing the cost burden normally involved with running a business. The purpose for that is multi faceted but a short version has the practice putting competitors out of business, allowing an underwritten company to take over a business sector while assuring the majority of world revenue from those business activities goes into Chinese pockets. There's also a little thing with undervaluing their currency involved in the game. As China has avoided reporting the amount they have provided to underwrite their businesses they are now being punished though the imposition of import tariffs. There are also being penalized for corporate espionage and theft of intellectual property. The demand for reports of their financial support for their businesses was demanded 15 years ago and they have repeatedly failed to comply, providing the means for their businesses to undersell everyone else. This has in effect made it impossible for our businesses to compete on anything close to an equal footing, which has cost this country countless manufacturing jobs in the past, something that contributed to our last deep recession. Our businesses cannot sell things for less than they cost to make as our government will not pay them to stay in business. High paying jobs cannot be created in the service sector, nor can the service sector sustain a healthy economy. We simply must re-build our manufacturing sector.

Taxes are another matter. No business truly benefits from taxes as they do not receive tax money. Taxes are paid to the people that impose them, which are always some form of government. Increases in taxes are bad as higher taxes takes money away from people that would spend that money in a manner they chose to, receiving something of tangible value for the money spent. Taxes reduce the amount of money people and businesses have available to spend as desired or needed. Reductions in taxes are always good as that puts more money in the pockets of the people that actually drive the economy, allowing them to buy more goods, employ more people, pay higher wages, or open new businesses.

Market forces drive product prices. Extremely popular items often maintain high prices because of their popularity. Manufacturers will keep prices as high as possible as long as people are willing to pay them. Prices fall when people don't buy products. In a fair and reasonable world high pricing would be reduced to pass on the benefits of cost reductions experienced from high volume raw material discounts but that rarely happens. When we see deeply discounted prices at high volume sales locations it's usually due to a couple of possible conditions. One is those products are not being bought by the public in quantities that justifies keeping the items in stock, and another is that the seller, manufacturer, or both is trying to clear the inventory from their shelves. This can happen because a seller may no longer want to handle the items or because a manufacturer has discontinued the items, not making any more to replenish sold inventory.

The tariffs imposed on Chinese goods has provided some interesting observations. As anything with a chip or printed circuit board was levied with a 25% tariff we should have expected to see prices of those items rise by an amount equal to the levied tariff. That has not been the case as prices have risen only a small percentage or not increased at all. That Chinese businesses have experienced a reduction in revenue because of the tariffs is an absolute but apparently they had profit margins that were more than ample to absorb most of the tariff in order to avoid price increases. They are holding the line in sales prices to retain their trade advantage. From my point of view that means the tariffs were not high enough.
 
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It's not complicated, tariffs are taxes paid to the government on imported goods. When you say "No business truly benefits from taxes as they do not receive tax money. " I'm not sure what you're getting at. The supposed benefit is that domestic products will be more desirable due to relatively lower prices. I'm not aware of American drone manufacturers that might benefit. Perhaps, if the tax increases are so onerous they will provide an impetus to develop new drone manufacturers. When you say that in your opinion the increased taxes were not high enough is promoting local development the reason?
You seem to believe that Yuneec's profit margins are so high that they will be able to absorb the costs without substantial price increases which would result in reduced sales. I do hope that that is the case but all of these clearance sales do not give me much hope.
 
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PatR

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I believe if you research deep enough you’ll find the reasons for Yuneec’s clearance pricing. Some will be obvious, some won’t, but they can be found. Tariffs are not the problem. I guessing only but a little, but the pricing you referenced is because they are no longer making them. They have moved on from those products.

Drone sales in general are being impacted by many factors, including international legislative efforts, mass media demonizing, market saturation, available disposable income, and the novelty has worn off. As far as American drone makers are concerned, they already have the market they want pretty well locked up, and that market is bot consumer level stuff. There’s not enough profit in consumer sales and any consumer level design released with new technologies would be stolen, copied, and see the price undercut by the Chinese within a couple weeks of its release. What company in their right mind wants to develop their competition’s product for them? I’ve spoken with CEO’s of a few major American drone companies and they all had similar responses.
 
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