# Message from Scott Mann on 3rdrail website



## superwarp1 (Dec 13, 2016)

> The effect of a 25% Tariff on our models coming from China would translate into a 6% to 10% increase in our prices depending on the type of project affected. Tariffs can be turned on anytime after June 17th. They will affect any project that has not departed the Chinese Port as of their effective date. Tariffs may never be turned on if there is a Trade Agreement. The decision rests with POTUS. Lets hope there is a Trade Agreement. We have looked into every possible alternative but most alternatives would cost more than just paying the Tariff.
> Stay Tuned: Scott Mann - CEO Sunset Models


6-10% increase would kill everything I have on order with him. Just can’t afford that kind of increase and all due respect Scott it’s also up to the Chinese government


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## Guest (May 23, 2019)

superwarp1 said:


> 6-10% increase would kill everything I have on order with him. Just can’t afford that kind of increase and all due respect Scott it’s also up to the Chinese government


Amen to that Gary! The Chinese government apparently won’t allow the O Scale Model train Tooling to leave China. These U.S. company assets are essentially or at least potentially prisoners of the Trade War. That shouldn’t be tolerated. 

Emile


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## superwarp1 (Dec 13, 2016)

You figure the Chinese Gov would just devalue their currency again like they did with the first round of tariffs essentially nullifying the tariff to begin with. Just one of the ways China cheats and another reason we need to win this war. I'll give up my reservation to win the war and we'll all be better off in the long one.


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## seayakbill (Jan 16, 2016)

I would honor my preorders if the price increases but would probably cut back on further purchases. I feel the present day prices are at the breaking point now, don't really need any more locos anyways.

Bill


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## Spence (Oct 15, 2015)

seayakbill said:


> don't really need any more locos anyways.
> 
> Bill


You mean to tell me Bill that 135+ enginews are enough!


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## superwarp1 (Dec 13, 2016)

seayakbill said:


> I would honor my preorders if the price increases but would probably cut back on further purchases. I feel the present day prices are at the breaking point now, don't really need any more locos anyways.
> 
> Bill


I think Scott should honor his agreed upon price when I reserved the engine. What if MTH or Lionel or AtlasO did this? Yes I can see all future announcements at the higher price but I agreed to pay a certain amount. No more no less


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## MartyE (Mar 27, 2019)

superwarp1 said:


> I think Scott should honor his agreed upon price when I reserved the engine. What if MTH or Lionel or AtlasO did this? Yes I can see all future announcements at the higher price but I agreed to pay a certain amount. No more no less


That may be easier for the bigger guys to honor the price but Scott doesn't have the other avenues of income like starter sets to offset losses.

I would also honor the preorder but would definitely watch my future purchases.


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## Guest (May 23, 2019)

II think Marty has it right, short margins. I am sure he would if he could.


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## superwarp1 (Dec 13, 2016)

Well lets hope this gets settled soon. Lots on order not just with 3rdrail but Lionel as well. Wondering if we will hear a statement from them and MTH?


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## MartyE (Mar 27, 2019)

Passenger Train Collector said:


> II think Marty has it right, short margins. I am sure he would if he could.


I agree. If he could I think he would do it.


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## gunrunnerjohn (Nov 10, 2010)

FWIW, I just got hit with the 25% tariff on my last shipment from China. Prices for lighting modules will be going up.  I was hoping they'd get this sorted out before they got around to me, but that ship has sailed. hwell:

I wondered when they'd get around to model trains, and I know that Scott will be hammered for the ERR stuff the next time he orders.


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## seayakbill (Jan 16, 2016)

Spence said:


> You mean to tell me Bill that 135+ enginews are enough!


LOL Spence, my wife thinks I really don't need anymore. I have 2 diesels on Pre-order with Pats Trains. It will be interesting where future pricing goes. There are probably a lot of old timers in my boat.

Bill


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## Severn (May 13, 2016)

Given time, one imagines price increases of various % will ripple through specifically here, the model train industry. I wonder though, will used sellers be able to uptick a little?

I had an experience some years back on being "forced" to go on two business trips to Paris. Oh the horror it was let me tell you. Anyway, one was under the Franc and the other under the Euro, pretty close together.

It seemed to me then and I can't offer proof really it was just a feeling, that everyone in Paris raised their prices to match the expensive Germans when the Euro came along!

Anyway that's just a little could be like that anecdote.


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## HarborBelt1970 (Sep 24, 2015)

I feel like I don't have a dog in this fight _as a purchaser_ because I don't have any pre-orders at present. But of course we are all in this one way or another. Rightly or wrongly (a) I have real sympathy for the importers and (b) if I had an order with Scott right now I'd honor it. From the figures he quotes his companies will be bearing an equal if not greater share of the tariff burden than the customers.

I don't see that the stranglehold over tooling that Chinese law protects is going to change because of a trade war but there are other issues at stake.

Anyway, I have not seen reference on this Forum to the following recent statement from Con-Cor, which was part of a thread over on the other place that - guess what - got closed down. I quote it in full:


*How Will new Trade Tariffs affect Model Trains*

From Jim Conway, Con-Cor Trains:

We already have been asked by a few people if Model Trains will be affected by the new China Tariff Structure.

While all the dust has not settled as yet, the short answer is YES, it will raise Model Train retail prices in the USA.​
Any shipment that left China after 12:01 AM Sat May 11th will be charged the 25% Duty rate by U.S. Customs when it hits U.S shores. (Shipments already in transit will not be affected.)

For example, if an American importer had a contract with a Chinese factory to make a locomotive for say $100.00 each, U.S. Customs has to be paid another $25.00 before that locomotive is allowed entry into the US. So now that $100.00 loco costs $125.00 to the USA importer.

If the importer already has established his retail price for that locomotive, now its cost has gone up 25% and more than likely the manufacturer will have to adjust his previously advertised price for that model upwards. The profit margins on model trains are not as large as the average model railroader thinks, Importers will not be able to absorb a 25% increase in cost and stay in business.

Bad news? Yes in the short term, but the point is the Chinese cannot continue to steal our patents and ideas and use them freely.
We at Con-Cor have had that happen to us the past, we have come up with some good ideas and novel ways to improve models, passed those along to a China Mfg to be used in "our" products, only to see the SAME IDEA turn up in Competitors products made in the same China factory within a few months.

By stealing ideas and innovations and low balling labor cost. China has forced just about all USA mfg of model trains to close over the years. and maybe as many as 1,000 people have lost their jobs at those model train factories.

So now China has a monopoly on the model train market here and has been able to raise its export pricing 30-40% over the past 5 years, while their actual "costs" have only gone up maybe 10% over those same 5 years.

They are doing exactly the same in many other industries.

I have visited China maybe 20 times and have seen the changes over time, they are very arrogant about stealing and copying other people's ideas.

All the best, please enjoy the summer

Jim Conway


For good measure, back in July last year Scott Mann went into print about the tariff situation as it then stood. In hindsight he was anticipating exactly what has come to pass: 

So far, there are no tariffs on model trains coming out of China. There are a lot of individual items that are targeted for tariffs, and that will affect the prices you pay for various things here.

I GUARANTEE YOU. IF YOUR SOURCE FOR GOODS IS SLAPPED WITH A 10% TARIFF, YOU WILL PAY MORE FOR WHATEVER IT IS YOU ARE BUYING.

IMHO: These are shots across the bow, and are intended to get our trading partners to come to the table and negotiate. In the short term it is disruptive. In the long term, we may straighten out some of these markets to better sell our US made products in China as well as better protect our IP.

MY OBSERVATIONS: When I fly through Korea, I see many Chinese women buying huge amounts of cosmetics at the duty free shops at Incheon Airport. They unpack them from their boxes and pack their suitcases full. Because the products are unpacked they are considered for personal use by China customs. But once they bring them to China, they sell them on the EBAY of China, Baidu for 30-50% more, because there are 30 - 50% trade barriers for goods coming into China from anywhere and they can compete with that price. The Chinese people that I have met, LOVE AMERICAN MADE PRODUCTS and would buy them regularly if they were available there. So IMHO this is a good fight to fight.

Chevrolet , Buick and Ford are coveted car brand that sell very well in China. They are made in factories inside China, similarly, foreign cars are made in the US like Hondas made in KY, or Hyundai or others. I think these sales from factories in China make up 10% or more of profit for our US corporations. So some of the arguments about selling cars into China don't really make sense. It will be interesting how this plays out.

As for our model train factories in China, they are all small mom and pop businesses. We work closely together to make these models for you, and we are all dedicated to continuing as long as possible. So don't be too concerned about 3rd Rail / Sunset Models / GGD model trains. We got it under control.


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## Severn (May 13, 2016)

The long game would have been to help develop other producers.... just my opinion but china can probably wait out a tariff hike.


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## Bill Webb (Sep 14, 2015)

We are going to have to review commitments on what has not been firmed up on the part of Scott... as in the GP 7 and 9 and the Virginian and C and O hoppers. We especially wanted both of these and ordered quite a few.

Thankfully we stayed away from Lionel due to the QC problems. Had we jumped in, the cost was going to be pretty high with all the catalogued N & W and NS stuff.

One thing for certain, our future purchases are going to be dramatically lower. Trains are not essentials and I expect that we are going to see a very significant increase in pricing for most things.

We support what is being done. It is long past time to understand that the Chinese are not our friends or even fair business partners.


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## superwarp1 (Dec 13, 2016)

Thanks for posting this Harbor/Belt


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## Yellowstone Special (Jun 23, 2015)

The absurd and ridiculous trade deficient with China has got to stop. In March, the U.S. imported $20 billion more of goods from China than it exported to China. It should never have become this bad. These tariff increases were bound to happen sooner or later.

Those of you who bought or buy the newest and the latest will be affected by the tariffs. But they have been a long time coming in order to stop the nonsense with China. It's the toy train manufacturers' fault in the first place for moving all production to China. 

Again, I don't have to have the newest and the latest when it comes to toy trains and am more than satisfied with my NIB stuff off Ebay and Trainz auctions. The pricing, quality, and running them with no problems keeps me happy.


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## Bryan Moran (Jan 15, 2017)

Vern 
I seldom weigh in HERE on political discussion but I hope the moderators understand this is germaine to our hobby because it is having an impact. You are correct, China has been flipping us the big middle finger for decades, like a bully. 

Too bad Tariffs seem to be a short term remedy. Tariffs are supposed to cause new markets to open - i.e. in the USA. C'mon Lionel, MTH and others! YOU own the molds and blueprints. Model train shells can be made anywhere, including the US. 

It might take a couple of years, and I know it won't happen, but all of this China stuff should be made here, or in a country where labor is cheap and they are dying for this sort of a business opportunity, like central America or even Mexico. 

But I think they should set up shop here in the USA.


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## Bryan Moran (Jan 15, 2017)

Bill Webb said:


> … One thing for certain, our future purchases are going to be dramatically lower. Trains are not essentials and I expect that we are going to see a very significant increase in pricing for most things.


There is quite a surplus of locomotives and rolling stock, as I seldom buy new and know this. I am a religious buyer out of the catalogs for MTH and Lionel, but if those prices skyrocket because of tariffs, then I will continue to buy used off ebay until THOSE prices increase due to the laws of supply and demand. 

Like most of us I have plenty of locomotives (around 25 and rising) and rolling stock (well over 200 pieces plus 3 full passenger car sets) to enjoy the hobby for years and wait this tariff stuff out.


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## Yellowstone Special (Jun 23, 2015)

Bryan Moran said:


> Vern
> I seldom weigh in HERE on political discussion but I hope the moderators understand this is germaine to our hobby because it is having an impact. You are correct, China has been flipping us the big middle finger for decades, like a bully.
> 
> Too bad Tariffs seem to be a short term remedy. Tariffs are supposed to cause new markets to open - i.e. in the USA. C'mon Lionel, MTH and others! YOU own the molds and blueprints. Model train shells can be made anywhere, including the US.
> ...


You make some good points, Bryan. It's my understanding that the main reason Lionel moved production overseas was because their UAW (United Auto Workers) union workers were breaking the company. I also understand that at one time way back, Lionel moved production to Mexico, but that didn't work out either. 

I too, would like to see U.S. toy train companies move production back to the U.S. But evidently, they have a hard time keeping the unions out of their hair.


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## Severn (May 13, 2016)

I don't think tariffs which are a domestic side tax on imports will fix a problem that started way back in 1972 when Nixon "opened" China. 

The chinese will surely just try to wait it out -- they are after all not really elected whereas our folks are.

Instead a complicated problem means a complicated multi-year, almost definitely multiple administration effort.

A hard sell in today's short term memory times, I admit.


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## CincinnatiWestern (Jun 16, 2015)

In the little dream world where moving production back to the USA somehow results in lower or even similar prices, this is going to all work out GREAT! 

There are products which we have produced in China for well over a decade, our costs are 1/4th the cost to have the same item made in the USA. Why do we have goods made in China? Easy, answer because our wholesale customers aren't willing to pay the price for the USA made goods, why? Because their AMERICAN customers are not willing to pay for goods made in the USA. 

Everyone wants "MADE IN USA" right up to the point where they have to pay for it, then "MADE ANYWHERE CHEAP" is good enough. 

Just remember when the price on your trains goes up, that China is paying for the tariffs.


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## Lee Willis (Jan 1, 2014)

I don't think 6% to 10% would change any of my buying plans. I don't welcome it, but . .


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## Severn (May 13, 2016)

I think its complicated. I pinpoint the "big change" around 1980 or so. But I suspect it started before this. We let our national policy drift into ripping out entire industries and having them re-appear elsewhere. Not exactly new but I think the scope and depth was greater. Compare the japanese car industry which hurt domestic a lot but eventually we kept domestic and got better cars all around. It wasn't easy. yet for many other things, we appear to have allowed the entire industry to decamp to say china & let the domestic industry die away. 
I think many of us not really connected to these heard the "boats are rising" for everyone talk, and that goods are cheaper and so on -- and we do "high tech" and just kinda didn't think about it.
But now in retrospect -- I believe the simple reality is these policies were good for wall street first, a little good for many with cheaper products. but hurt many otherwise in those industries.
So we've let it go too easy I suppose. I have no right answer, it's not easy to undo it all, we can't... I'm sympathetic to fixes but have no real idea what to do. And since to me its complicated, started years ago and so on -- would take a big concerted perhaps decades long effort to address (somehow), and that's not what folks would want to hear. (assuming i'm correct)


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## Guest (May 23, 2019)

A 6 % to 10% increase may not bother some people when purchasing trains and related items but I may have to think twice when making a future purchase as a $500.00 U.S. loco would be approximately $824.67 CDN. depending on taxes and duties applied. Some future purchases may have to be curtailed.

Gary.


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## Rocky Mountaineer (Sep 19, 2015)

In the business world, order cancellations are a common occurrence. Ask Boeing. So if you can't handle a 10% increase, just cancel. No big deal. There's nothing "unethical" about it. Small and large businesses are accustomed to this. Fortunately, it's not an everyday occurrence. So they should be just fine.

As for me. Third Rail is already WAY out of my price range for general product purchases. My most recent 3rd rail purchase was some left-over inventory Scott had on hand for the Empire Builder train -- presumably a pre-order cancellation by another buyer. 8 passenger cars plus the full-dome vista car cost close to $3,000. PLUS he wanted over $125 in shipping!!!  Never again. It's worse with powered locomotives: a cross-country UPS shipment from 3rd Rail is now roughly $50 PER powered unit. Again, no thank you. 

Don't get me wrong... the train detail is outstanding. But I just don't NEED that level of detailing at that price-point nowadays. True... brass is even more expensive, but the ultra high-end has NEVER been in my league anyway.

While 6-10% may not sound like a deal-breaker, it is to me. I had already put 3rd Rail on my "once in a blue moon - perhaps I'll treat myself" list. Now at 10% more, Scott just priced himself out of my league altogether. He's a nice guy, but I'm sure he'll take the loss of even a once-and-awhile customer like me in stride. And he'll try to find new customers who will pay the higher prices.

I'm so glad I built up my train inventory before all of this crap hit the fan. If Lionel and MTH try to pass on increased costs, it's game over for me. I don't need another locomotive, freight car or passenger car -- thank you very much -- no matter how appealing the catalogs make the next best things appear as "must haves".  And it's actually quite a free feeling to get to that point in the hobby.

David


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## gunrunnerjohn (Nov 10, 2010)

I could probably live out my life without another train purchase and never run out of things to run, so I'm taking a back seat to all of this. It was bad enough that I got clipped on my electronic build, I probably won't be ordering any more stuff until sanity returns.


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## superwarp1 (Dec 13, 2016)

gunrunnerjohn said:


> I could probably live out my life without another train purchase and never run out of things to run, so I'm taking a back seat to all of this. It was bad enough that I got clipped on my electronic build, I probably won't be ordering any more stuff until sanity returns.


Well, I'm trying to play catch up to you guys.:cheeky4: Lots a room yet to go. I have two orders in with 3rdrail. They are not due until next year so I'll stay put for now.


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## Severn (May 13, 2016)

I just buy used O, some new HO though. Which is already way cheaper. I expect it go up some and I don't know if it will or will not change what I buy. I'm not inclined to buy much right now anyway. I wonder if the used market will also up charge a little to take advantage of the price difference should it all you know come to fruition.


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## seayakbill (Jan 16, 2016)

If you are thinking about pulling the trigger on a Lionel Legacy $1800 steamer but Lionel is forced to increase the price with a 20% tariff surcharge by $360 that probably kills the deal for a lot of folks.

Bill


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## Rocky Mountaineer (Sep 19, 2015)

seayakbill said:


> If you are thinking about pulling the trigger on a Lionel Legacy $1800 steamer but Lionel is forced to increase the price with a 20% tariff surcharge by $360 that probably kills the deal for a lot of folks.
> 
> Bill


Exactly what I'm talking about. The irony is let's say you felt bad about cancelling your pre-order and paid the premium anyway. I guarantee if you'd try to turn that puppy around and sell it MINT, you wouldn't get anywhere close to what you paid for it -- nor what you would have paid even at the original pre-order price. Very few exceptions. So for premium dollars paid, you really need to be enjoying what you buy... 'cause few others will unless you're giving it away. That's just the harsh reality of life in a buyer's (secondary) market these days.

David


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## Maxum (Apr 10, 2017)

CincinnatiWestern said:


> Just remember when the price on your trains goes up, that China is paying for the tariffs.



How do you figure?

Read this,
https://www.reuters.com/article/us-usa-trade-china-tariffs-explainer/who-pays-trumps-tariffs-china-or-u-s-customers-and-companies-idUSKCN1SR1UI

You, me and other consumers pay the tariffs, not China.


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## seayakbill (Jan 16, 2016)

Maxum said:


> How do you figure?
> 
> Read this,
> https://www.reuters.com/article/us-usa-trade-china-tariffs-explainer/who-pays-trumps-tariffs-china-or-u-s-customers-and-companies-idUSKCN1SR1UI
> ...


Yep, the importer pays the tariff ( which is an import tax ) which is then passed on to the consumer.

Bill


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## gunrunnerjohn (Nov 10, 2010)

I know that I recently got a shipment from China of my lighting modules, and I can assure you there was no Chinese guy waiting to pay the whopping 25% tariff, it came out of my pocket!


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## HarborBelt1970 (Sep 24, 2015)

gunrunnerjohn said:


> I know that I recently got a shipment from China of my lighting modules, and I can assure you there was no Chinese guy waiting to pay the whopping 25% tariff, it came out of my pocket!


I wasn't consciously trying to get in under the wire but last week I ordered another batch of your passenger car LED lighting sets from Hennings at the price they have been for a while!

I'll add that because these sets do exactly what they say on the package a tariff-caused price increase would/will not put me off. 

Big ticket items like new locos/cars are a different matter but that has to do with QC/reliability as much as anything else.


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## Lee Willis (Jan 1, 2014)

EVeryone seems to be suddenly talking about a 30% or 25% increase in retail price. 

This thread started with Scott Mann's message which was "The effect of a 25% Tariff on our models coming from China would translate into a 6% to 10% increase in our prices . . ." The tariff applies to the import value of the loco, etc., which may be only a portion of the retail. 

That means between $108 and $180 on an $1800 Legacy steamer. In most cases that would not sink my plans. A consideration yes, but its not nearly as extreme an increases as 25% on the top of $1800, but like Scott says that is not how it will work.


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## HarborBelt1970 (Sep 24, 2015)

Lee Willis said:


> EVeryone seems to be suddenly talking about a 30% or 25% increase in retail price.
> 
> This thread started with Scott Mann's message which was "The effect of a 25% Tariff on our models coming from China would translate into a 6% to 10% increase in our prices . . ." The tariff applies to the import value of the loco, etc., which may be only a portion of the retail.


Very fair point, that, and falsifies my assumption that the 25% tariff would translate into an equivalent impact on the retail price. Also sheds a different light on the increase mentioned above, which might be of the whole of the tariff on the importer's cost. In an indirect way, it might also disclose something about the importer's profit margin on these Chinese-made goods.

In any event, I agree that 6-10% is not a deal breaker - at least as far as I am concerned if I really want the product.


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## Severn (May 13, 2016)

I think it will take awhile for prices to increase completely and ripple through the system. Some companies may sit on price adjustments longer than others, and specific product production details probably delay it all somewhat. Given time though, things will go up perhaps as high as 25%. That's a lot but more evident on pricier items. Higher prices mean less sales. Eventually that ripples through the system and finally back to producers who may be forced to cut production or layoff people etc. But to me the retailer would feel it first... That is after the consumer walks away from some sales.


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