Tariffs and Retaliation - Today's Update

New Tariffs (Taxes) Go Into Effect Today

Here in the United States, Donald Trump has decreed that the following taxes now be collected at the US border:

• 25% tax on all goods from Mexico
• 25% tax on all goods from Canada, except energy
• 10% tax on all energy imports from Canada
• 20% total tax on all goods imported from China (increased from last month's 10%)

What this Means

The increased tax on goods made in China will, we expect, increase our cost on projects currently in production (such as Catstronauts) and also drive up the cost of reprints we planned to order soon, such as CULTivate. For CULTivate, we did look at US production options, but the estimated printing price was about three times the price of the best Chinese bid. In addition, the effect of taxes on raw materials and components (like paper from Canada and dice from China) means that US printing costs will go up even higher very soon.

Here in Minnesota, I've been made aware that all of our refineries are fed with Canadian oil, so the 10% tax will immediately affect the cost of gasoline and transportation here. I'm afraid a general increase in all our overhead and operating expenses is inevitable.

Canada Retaliates

In response to America's trade war volley, Canada has retaliated with 25% tariffs on a list of product categories. Among those categories is Harmonized Tariff System code 9504.40.00, which includes playing cards. These taxes only apply to goods made in the USA.

Many of our card games over the years have been printed in the United States, are labeled as "Made in USA," and will now be subject to a 25% tax at the border if they're purchased by a Canadian customer. This is further complicated by the fact that our top-selling card games have been printed in different countries across different printings over the years, so whether that tax is applied depends on the specific copy that is being sent to a Canadian customer. 

I'm going to have a conversation with our warehouse team about how we should handle Canadian orders that include made-in-USA card game products. We may need to take an extra step to reach out and make sure the customer understands they'll have an extra tax and fees at the border, in case they want to cancel. This extra staff time will no doubt increase our general operating expenses, too.

Looking Forward

Despite the optimism of some Wall Street analysts who think this is merely a negotiating strategy, I think these taxes are here for the long haul, and are likely to increase and expand to more countries. Trump's love for tariffs has been persistent, alongside his belief that the greatest period of American history was the "gilded age" when there was no federal income tax and the federal government was funded entirely by excise taxes and tariffs. The declaration of a "fentanyl emergency" is the official fig leaf to justify new taxes without congressional action. But there is so far no indication that the majority of congress will do anything to oppose it. Given that fentanyl over the US-Canadian border is almost negligible (0.2% of fentanyl seizures in fiscal 2024) and falling, there are no objective conditions that Canada can fulfill to guarantee removal of the tariffs. The taxes will be in place as long as Trump wants, or until Congress steps in to assert its authority (and can overcome a veto). Also, I expect that as more nations are subject to the same treatment, we will see more even more retaliatory tariffs. 

I'll continue to monitor the situation and study our options. But please understand that it looks like price increases will be necessary. We need to pass along the taxes we pay at the border upon import of new printings, at a minimum. For goods already in our warehouse, we have to consider our rising operation costs across the board, and prepare for items that need to be reprinted in the future at increased prices, plus the risk of further border tax increases.

I'd rather not have to set up pricing that fluctuates every month (or week) based on swings in trade policy, but we're being given almost no lead time to prepare for these arbitrary taxes. We can only play catch-up.

-John Nephew
  Atlas Games President