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I guess the USTR likes Japanese acoustic pianos!
#2898334 10/08/19 04:48 PM
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Those who have been around awhile know that when I'm not playing piano I'm an international trade lawyer. So my contribution to the forum is to share with you the acoustic piano provisions in the ink-still-wet U.S.-Japan Trade Agreement. At this point nobody knows when the agreement will actually enter into force, but when it does the duty on Japanese acoustic pianos (upright and grand) will immediately drop for 4.7% to 1.7%, and then are scheduled to be phased out completely in Year 2.

Digitals? Not as good of a deal. Duties on digitals will drop from 5.4% to 2.7%, then stay there.

Larry.

Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2898350 10/08/19 05:54 PM
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Originally Posted by iLaw
Those who have been around awhile know that when I'm not playing piano I'm an international trade lawyer. So my contribution to the forum is to share with you the acoustic piano provisions in the ink-still-wet U.S.-Japan Trade Agreement. At this point nobody knows when the agreement will actually enter into force, but when it does the duty on Japanese acoustic pianos (upright and grand) will immediately drop for 4.7% to 1.7%, and then are scheduled to be phased out completely in Year 2.

Digitals? Not as good of a deal. Duties on digitals will drop from 5.4% to 2.7%, then stay there.

Larry.


Thanks for the update!



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Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2898670 10/09/19 02:45 PM
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Yay! That will be the reason for me to buy a better Yamaha. I would only get a 65% trade in at the Kawai dealer. I kinda think that’s too big a hit to justify switching Japanese piano companies. Besides I’m dying for an excuse to look at an S3x. I guess brand loyalty still pays off occasionally. And yes I admit fully I fell in to the lure of “lifetime full trade up ease and convenience. I am also fully aware that I can’t negotiate much lower than sale price.


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Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2898834 10/10/19 04:31 AM
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US dealers will not have an incentive to lower prices. Presumeably they have set their selling prices so that their expected profits are at their maximum. If they were to lower their prices, they would expect to earn less than they could have done.

Government tariffs hit importers earnings but should leave selling prices unaltered, and conversely, lowering tariffs will benefit the importers, while still leave selling prices unaltered.

Of course, importers may try to con buyers into believing that higher tariffs must inevitably mean that buyers pay more, and some buyers may believe the story. Most, probably will not act on this, because their ability to pay may simply not allow them to pay more.


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Re: I guess the USTR likes Japanese acoustic pianos!
QuasiUnaFantasia #2898838 10/10/19 05:28 AM
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Originally Posted by QuasiUnaFantasia
US dealers will not have an incentive to lower prices. Presumeably they have set their selling prices so that their expected profits are at their maximum. If they were to lower their prices, they would expect to earn less than they could have done.

Government tariffs hit importers earnings but should leave selling prices unaltered, and conversely, lowering tariffs will benefit the importers, while still leave selling prices unaltered.

Of course, importers may try to con buyers into believing that higher tariffs must inevitably mean that buyers pay more, and some buyers may believe the story. Most, probably will not act on this, because their ability to pay may simply not allow them to pay more.


That is a very strange view of economics which I'm not sure I recognise as resembling the world we live in. Maybe it holds true for the poster's location. Possibly.

Re: I guess the USTR likes Japanese acoustic pianos!
gwing #2898852 10/10/19 06:21 AM
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Originally Posted by gwing
That is a very strange view of economics which I'm not sure I recognise as resembling the world we live in. Maybe it holds true for the poster's location. Possibly.


If an importer could earn more by lowering their price, they would tend to do so (since they generally want to earn as much as possible). Therefore an importer would not wait until tariffs are lowered, indeed they would lower their prices even though tariffs remained the same.

Tariffs are a cost for importers, similar to costs for raw materials and wages. If this cost goes up high enough, the importer will be forced out of business. S/he may try to pass on the tariffs to the customers, but they will likely purchase less as a consequence, thereby lowering the importers earnings. At some price point there will be no profit at all for the importer, and business ceases.

If the tariffs go down, the process is reversed, and the importer may exhale a sigh of relief. But the prices asked of the customers should remain unaltered, unless the importer wants to earn less money than possible by keeping the prices steady. Lowering prices will lead to more sales, but less earnings per sale, and less overall profit.

This is in principle not subject to geographical area, nor to prevalent culture, since it is general economic law. It is subject to the market savviness of importers, however.


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Re: I guess the USTR likes Japanese acoustic pianos!
QuasiUnaFantasia #2898853 10/10/19 06:23 AM
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Originally Posted by QuasiUnaFantasia
Originally Posted by gwing
That is a very strange view of economics which I'm not sure I recognise as resembling the world we live in. Maybe it holds true for the poster's location. Possibly.
If an importer could earn more by lowering their price, they would tend to do so (since they generally want to earn as much as possible). Therefore an importer would not wait until tariffs are lowered, indeed they would lower their prices even though tariffs remained the same.

Tariffs are a cost for importers, similar to costs for raw materials and wages. If this cost goes up high enough, the importer will be forced out of business. S/he may try to pass on the tariffs to the customers, but they will likely purchase less as a consequence, thereby lowering the importers earnings. At some price point there will be no profit at all for the importer, and business ceases.

If the tariffs go down, the process is reversed, and the importer may exhale a sigh of relief. But the prices asked of the customers should remain unaltered, unless the importer wants to earn less money than possible by keeping the prices steady. Lowering prices will lead to more sales, but less earnings per sale, and less overall profit.

The importer is usually not the only importer, therefore what they do will be affected by what their competitors do and vice versa. In fact, they may feel more pressure on price from competitors and customer demand (or its absence), then they do from the tariffs.


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Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2898893 10/10/19 09:09 AM
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I’ve taken graduate Economics and Finance courses. Tariffs typically target exporter businesses. It’s a factor which can directly affect the price of the product in the country to which the products are exported. There is also the competition prices to consider. If the tariff rate drops, its generally good news for all exporting companies. Some large powerful companies can and do just absorb the tariffs as cost of doing business. Some smaller companies do pass along that cost to export consumers.
For buyers of Japanese goods, like cars, trucks, motorcycles, pianos, tractors and generators this should be a sprinkle of good news.
I guess we’ll see.


J & J
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Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2898920 10/10/19 10:25 AM
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Whether tariff reduction on imported products may affect final sale price depends on the nature of the business. If the business faces a lot of competition (such that the profit margin is very small), tariff reduction may lead to some sale price reduction when the competitive business pass-through the reduction to the consumers. How much is the pass-through depends on how severe is the competition. If the business acts more like a monopoly with very little competition and the demand for this imported product is fairly price insensitive, then most if not all of the tariff reduction will just benefit the business with very little being pass-through to the consumers. So, how will this trade deal affects the market prices for Yamaha and Kawai? If one of this company start to adjust their prices downward, the other will need to react and follow. The more interesting question is how will this trade deal affects the market prices for other brands, domestic or imported? It depends on how substitutable are these pianos in the eyes of the consumers. If these pianos are perceived as quite homogeneous and therefore very substitutable, then all pianos will face downward price pressure. But if these pianos are perceived as very different, then the tariff reduction of Japanese pianos may not affect prices of other pianos.

Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2898931 10/10/19 10:51 AM
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On Apoll0’s same discussion- what might affect a piano makers pricing even more is tariffs on Sitka spruce, wool felt, and iron. It’s something that the global economists studies on piano manufacturing. Even though pianos are large instrument, I would think a piano price is still mostly labor costs. Even manufactured pianos are a ton of human handiwork. Exchange rates, how the economy overall is doing in the piano country’s currency to dollars goes. If Japan’s economy is doing great, the price here goes up because the Japan’s labor market becomes tighter and they have to raise wages for skilled workers. With all the different factors in today’s global market, who can tell what would happen. I’m just a happy American whose delighted by the prospect that the price may come down a bit on an instrument that I love. Absolutely over the top capitalistic optimism.

Last edited by j&j; 10/10/19 10:53 AM.

J & J
Estonia L190 Hidden Beauty
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My piano’s voice is beautiful!
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Re: I guess the USTR likes Japanese acoustic pianos!
iLaw #2899002 10/10/19 01:15 PM
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Come to think of it, that’d be a great Masters thesis. What global factors affect the world-wide piano market. Of course that research has been done by every large piano makers marketing departments and can be found in stockholders reports. I try to read up on MI news.


J & J
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Casio Privia PX-330
My piano’s voice is beautiful!
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