Tariffs and the future of MFD

[Manoli]

Will the fee be levied on all sales or just those to the U.S.?

The 3% is a price increase in response to the current 10% tariff. I’d suspect that if/ when the tariff rate changes , so will the 3% surcharge. IIRC, PhaseOne orders are always priced in Danish Kroner (converted to your ‘local’ currency when you place the order).

With a weakening dollar, currency risk is very much there.

 

[Paul Spinnler]

It must be said, 3% is a very, very modest price increase as the FX impact alone will further drive up the cost base probably more than that from a USD perspective (which is key for margins on gear sold in the US) for P1.

Looks like capital globally is flowing out of US govt. bonds right now (as a result of decreasing confidence in US assets), weakening the dollar against some key currency pairs, especially EUR; which in turn will drive inflation fears in the next months which will impact consumer expectations and as a result spending which will impact the rest of the world if less goods are imported via trade due to a mix of psychology and tariffs.

Seems like a good time to pick up the camera and shoot some photos ... until the storm abates ...

 

[Doppler9000]

Dear High-Valued Customer,

Phase One is doing all we can to minimize the current tariff impact for our customers, both now and in the future. ... We are taking a balanced approach and have made the decision not to pass the full burden onto you. Instead, Phase One will absorb most of the unexpected tariff costs. Despite our efforts, however, we regret to inform you that a portion of the tariff costs will be added to open and new purchases.

Starting April 1st, a 3% tariff fee will be added to all orders. ...

Thank you for your understanding—collaborating positively is, we believe, the best way forward.

Best regards,

Michael Michael Griffiths

VP | Global Sales

The “balanced approach” appears to be spreading the costs of the U.S. tariffs to every customer regardless of where they live.

 

[Doppler9000]

Famous Libertarian on the theory and practice of tariffs.

 

[Doppler9000]

The 3% is a price increase in response to the current 10% tariff.

Indeed. My question was about who was funding the response.

 

[Paul Spinnler]

Tariffs are one thing, but the second order effects will now play out and are as we speak - global investors pulling out of the USD by selling US govt. bonds and investments flowing into Europe etc. and domestically the fears re unemployement, uncertain prices etc weigh on spend - its really a dangerous path, not only because of the tariffs themselves, but the psychology of all of this.

My understanding of the reports coming out this morning in the US is that the consumer environment has significantly worsened meaning people hold off on consumption now potentially - and any economy needs spending, ie money to move hands, to survive.

That is to say even if P1 would throw around insane discounts right now, spend would be subdued.

Ie even w/o tariffs, people are becoming a bit more sceptical about the future which is ofc not ideal when looking at a big cash out for high end photography gear which sometimes is seen as not fundamentally needed ... or spend is postponed, which ofc does not help does who depend on the industry as rents and bills are due each month.

Tricky.

 

[sjg284]

Personally aside from a long planned trip I have already booked, I've dialed back discretionary spending as to me we are in for a rough ride ahead. GFC/COVID level market volatility, rates moving up & dollar moving down, spiking inflation expectations, etc are all pointing in a bad direction.

I was torn for a bit about getting in some hobby item purchases quickly before prices go up, but I'm more likely to regret the spend in 6 months if things go wrong than I will regret saving 10-20% if things go well but prices rise.

Something of a litmus test depending on your partisan preferences but I'll put it this way.. most people seem to fall into one of these two camps:
* The tariffs are necessary because we are already in an economic crisis
* The tariffs are unnecessary and causing an economic crisis

Both get you to the same place - crisis.

 

[Paul Spinnler]

Steve, what you describe is exactly what's happening now across the board, also ebay probably less volume right now

 

[hcubell]

The “balanced approach” appears to be spreading the costs of the U.S. tariffs to every customer regardless of where they live. You gotta love how language is used these days.

Is it clear that non US customers will also have to 3% extra? I didn't read it that way.

 

[Doppler9000]

Is it clear that non US customers will also have to 3% extra? I didn't read it that way.

The letter was from the VP for Global Sales who is based in Australia, but that is not dispositive. Why do you read it as referring solely to U.S. customers?

 

[Paul Spinnler]

Well 3% on 45k is still a cool 1.5k on top!

Wouldn't be surprised if orders are cancelled.

 

[cunim]

I never got that email in Canada. I read it as referring only to the US and, if that is all there is to it, it's a good deal for P1's US clients. If P1 were to try to reduce a tariff-based US price increase by distributing a smaller increase over the global market - well that would be very bad for the brand. As Danes with an interest in Greenland, P1 are probably sensitive to these issues.

I'm glad this was raised. I should probably check with my P1 dealer to better understand any price changes that occur here. If they are buffering US prices by increasing the load on rest of world, I would not buy P1 again,.

 

[Paul Spinnler]

Agree, it only makes sense for the US, to be honest, ie they subsidize US prices via the rest of the world and not spread the cost of the US to the rest.

Would be very surprised if a EU order of a digital back suddenly jumps 1.5k because of US tariffs if the back is made in JP, the HQ is in DK, etc.

 

[sjg284]

Latest art of the deal is they've now exempted China tariffs on - phones, computers, routers, chipmaking equipment, memory, chips..

So random hobbyist and consumer goods like cameras, guitars, etc remain tariffed but tech transfer/national security risk items are exempted!

Got it.

 

[Smoothjazz]

I was considering buying a new lens or two, but now wonder whether I should either buy now ASAP before the tariffs, or consider the used market. I was also considering a Leica M11 monochrome- the tariff adding 25% to the cost would be just out of reach.

 

[tcdeveau]

I was considering buying a new lens or two, but now wonder whether I should either buy now ASAP before the tariffs, or consider the used market. I was also considering a Leica M11 monochrome- the tariff adding 25% to the cost would be just out of reach.

if you’re looking at buying a new M11M and lenses, I’d buy now…..or buy a used one sooner rather than later. Tariffs or not Leica isn’t shy about raising prices periodically anyway. I imagine bodies would be more affected than most lenses but am certainly no expert.

I really miss the M10M I had and may look for a used one, or M11M, at some point myself.

I wonder where the S4 is in development and to what degree this tariff stuff may affect new product launches. I’m excited about the prospect of a mirrorless MF Leica.

 

[Manoli]

… Why do you read it as referring solely to U.S. customers?

… ostensibly ‘cos US customers are the ones targeted by the new tariff?

Nevertheless, it’s an open book as to how P1 finally decide to implement the increase. Once a decision is made, the dealers should be the first to know.
@Steve Hendrix - where are you?

Well 3% on 45k is still a cool 1.5k on top!

The 3% surcharge isn’t the only increase US clients are facing. The value of the US dollar v the Danish Krone has fallen by almost 11% (7.30 > 6.51)* so the combined price hike currently stands at circa 14%.

P1, hardly the most altruistic of companies, probably hard at work on their price elasticity calculations.

Edit:
* The exchange rate taken from the week prior to Trump's inauguration.

 

[Rod S.]

Is it clear that non US customers will also have to 3% extra? I didn't read it that way.

I'm in Australia and did not receive the P1 letter either.

However, the AUD is now 5% lower against the Danish Krone than it was on 2 April.

 

[Bill_Evans]

I think the actual effects of the tariffs on the price of camera gear misses the point. At least for me it does. Tariffs have caused a great deal of business uncertainty for my clients. And trickle down being what is is, my business as well. Early this year I swapped out my XCD zoom for the 75p (thanks Steve) and tweaked my lighting kit. But now I’m hungering (edit: s/b hunkering ) down and holding off on all but essential purchases. I’d be surprised if I’m the only working photographer, or small business owner, who chooses this path.

 

[steve_cor]

But now I’m hungering down.

Hungering down could be good preparation for Easter brunch. And there should be no tariff on Easter brunch.