MIM Fenders and Mexico wall

[Simon Underwood]

Just thinking, President Biff's latest ploy to get the Mexicans to pay for his wall is a 20% import tax on goods coming from Mexico. I'm wondering how this might affect Fender's Mexican operation.

Simon

[Iain Purdon]

It's all conjecture at the moment but in theory the price of a Mexican Fender would go up to purchasers in the US. Can't see why it would affect exports from Mexico to other countries though.

[JimN]

But are MIM Fenders exported from Mexico to other countries?

My understanding is that they are delivered first to Fender in the USA (at ex-catory prices) and then re-exported from the USA to their ultimate destination. Extra duties Mexico-USA would apply only to the intra-Fender price, which would be a lot lower than full RRP.

[Uncle Fiesta]

I'd heard that part of the package was a reduction in taxes for goods made in the USA, so while MIM Fenders may go up in price, also MIA ones may go down.

[JimN]

I'd heard that part of the package was a reduction in taxes for goods made in the USA, so while MIM Fenders may go up in price, also MIA ones may go down.

The import tax is only about 2.5% - 3% (plus VAT).

[Uncle Fiesta]

No I meant the corporation tax the companies pay to the US government.

[JimN]

Corporation Tax (Corporate Tax in the USA) is only paid on the company's operational profit.

It isn't a tax imposed on goods.

It wouldn't matter if the tax were increased tenfold, it wouldn't affect the out of the factory-gate price of products unless the company chose to increase prices in a (vain) attempt to recover it.

In any case, there is no reason to suppose that the USA government is about to increase Corporate Tax. It might, more likely, reduce it.