Rising prices and stocking up

[huntersdog]

You might need to retake econ 101, because that is not how it works. Nor is it that simple.
How much of the burden of a tax is borne by the consumer is a function of elasticity of demand. For a perfectly inelastic demand, 100% is borne by the consumer. For a perfectly elastic demand, 100% is borne by the producer. Any elasticity between these extremes is borne proportionally by each.

Furthermore, that is only what might be called "nominal" pricing here, not pricing adjusted for purchasing power. For that the answer is further complicated, because a tariff does not simply destroy the revenue it collects. Instead, that revenue goes to the government. To the extent that such revenue is used to lower tax burdens or print less money the purchasing power is returned to consumers. This is not a 1:1 ratio because there is going to be some redistribution of purchasing power, but in aggregate it holds. And beyond this, an additional secondary effect of capital flowing to domestic industry tends to generate additional employment which then further add to consumer purchasing power.

Now that we have reviewed our econ 101, let's apply this to ammo. Ammo has a relatively elastic demand except for crisis periods (pandemics, Anti-2A people in power). Thus more of the burden of a tax will tend to fall on the producer. Furthermore, compared to many goods, a relatively large portion of the ammo supply chain is based in the US. Thus, the impact of a tariff in general is proportionately lower than other industries.

I'm not predicting ammo prices will rise as a result of tariffs, except perhaps in the very short run as things move toward a new equilibrium. On the contrary, tariffs may provide critical price support to domestic producers that are otherwise facing 4 years of depressed demand. This is an across the board win, because we need to make more ammo and ammo components domestically.

China announced on Tuesday a ban on the export of a number of minerals with military and technology applications to the U.S., one day after the Biden administration further curbed its own exports as part of its crackdown on China's semiconductor industry.

The Chinese ban applies to the minerals antimony, gallium and germanium. It also restricts the export of graphite. The minerals are used in a wide range of things including semiconductors, infrared technologies, fiber optic cables, bullets and electric vehicle batteries.

China bans export of key minerals to U.S. as trade row deepens even before Trump's second term

As China responds to the latest U.S. measures by banning the export of several key minerals, one analyst warns of "a trade war that has no winners."

www.cbsnews.com

Reports indicate that China has halted shipments of cotton used to manufacture gunpowder. This move has prompted leading military powers such as the United States, Russia, and France to seek alternative sources and strive for self-sufficiency.


Propellants, which are pyrotechnic charges combining combustible and oxidizing substances, allow for rapid generation of combustion gases. These gases propel projectiles from firearms and launch missiles. During wars and military exercises, artillery consumes the bulk of propellants, making their shortage a serious impediment to a nation’s firepower.

Global Shortage of Gunpowder Threatens Military Readiness

As China halts nitrocellulose shipments, global military powers face a critical shortage of gunpowder, impacting artillery and ammunition production.

military.news

 

[JFrank]

Prices may go up, but if everyone starts panic buying we may also have shortages that drive prices even higher.

 

[rust collector]

Price and availability concerns are a part of being a consumer. Once we have been through some supply/cost cycles, we tend to be a bit careful, and of course we have seen the stampedes for toilet tissue and other commodities. Consequently these threads pop up regularly, and seem to have a life of their own.

Yes, I could buy Remington UMC 9mm for $10/100 rounds on sale back around 1990, but that equates to $32 now. I bought domestic 9mm for $11/50 on sale a month ago, which is $22/100. If I had stocked up in 1990, my ammo would be 35 years old and worth less now than when I bought it.

Prices are normally adjusted around the first of the year, but as on E-bay, asking isn't the same as getting. Prices will be affected by materials and labor costs, consumer demand, world events, trade wars, embargoes and many factors beyond our perception or control. By all means, stock at levels that make sense to you, but don't imagine you have a crystal ball and above all, don't trigger a run on the bank.

 

[Jamie B]

You might need to retake econ 101, because that is not how it works. Nor is it that simple.
How much of the burden of a tax is borne by the consumer is a function of elasticity of demand. For a perfectly inelastic demand, 100% is borne by the consumer. For a perfectly elastic demand, 100% is borne by the producer. Any elasticity between these extremes is borne proportionally by each.

Furthermore, that is only what might be called "nominal" pricing here, not pricing adjusted for purchasing power. For that the answer is further complicated, because a tariff does not simply destroy the revenue it collects. Instead, that revenue goes to the government. To the extent that such revenue is used to lower tax burdens or print less money the purchasing power is returned to consumers. This is not a 1:1 ratio because there is going to be some redistribution of purchasing power, but in aggregate it holds. And beyond this, an additional secondary effect of capital flowing to domestic industry tends to generate additional employment which then further add to consumer purchasing power.

Now that we have reviewed our econ 101, let's apply this to ammo. Ammo has a relatively elastic demand except for crisis periods (pandemics, Anti-2A people in power). Thus more of the burden of a tax will tend to fall on the producer. Furthermore, compared to many goods, a relatively large portion of the ammo supply chain is based in the US. Thus, the impact of a tariff in general is proportionately lower than other industries.

I'm not predicting ammo prices will rise as a result of tariffs, except perhaps in the very short run as things move toward a new equilibrium. On the contrary, tariffs may provide critical price support to domestic producers that are otherwise facing 4 years of depressed demand. This is an across the board win, because we need to make more ammo and ammo components domestically.

I am familiar how demand works.
Prices fluctuate due to demand and supply.
The cost of an item with a tariff will still fluctuate, however the portion of the price associated directly with the tariff will be constant.
Simplistically, an item with a $100 sales price where $10 of that price is due to the tariff will only fluctuate within $90 of that price.
The $10 tariff portion will always remain constant.
Now that I have explained simple tariff logic, maybe you will understand.
If you play that ‘talk down’ game with me again, this discussion is over.

 

[rust collector]

Let's try to focus on the OP question of what he should stock up, and be respectful or the thread will end.

 

[jmorris]

With the chances that prices may rise over the next few months to year, including imported raw materials, what should one purchase during the Christmas season in order to stock up?

Things you need or might want. Land is almost always a winner over things you don’t want or need. I also see you didn’t include powder in your reloading supply’, it’s pretty important.

 

[Jamie B]

Things you need or might want. Land is almost always a winner over things you don’t want or need. I also see you didn’t include powder in your reloading supply’, it’s pretty important.

Absolutely.
We have 10 acres and have never regretted that purchase.
Beyond that, never enough guns, ammo and all reloading components.

 

[Buck13]

Nope, it’s very simple.
For every item that is designated, that product’s price will increase by the exact percentage of the tariff imposed.

Yep. Only exception is things that can be produced in the US for sale at less than the old price + tariff on the import. In that case either the import will be offered for sale at a lower profit margin to stay competitive (unlikely) or will no longer be imported (more likely).

But how many things can be produced that cheaply in the US *and* actually have a production line available here? Standing up new production capacity ain't cheap, nor does it happen overnight in most cases. Tariffs on China definitely mean higher prices at Walmart on 95% of the stuff!

 

[Buck13]

I think we will see price increases on the ammo , primers and powder side.

Vista Outdoor Stockholders Approve CSG Transaction to Acquire The Kinetic Group

CSG Transaction Expected to Close on November 27, 2024 SVP Transaction to Acquire Revelyst on Track to Close by January 2025 Vista Outdoor Inc. (“Vista Outdoor”, the “Company”) (NYSE: VSTO) today announced that its stockholders voted to approve the sale of The Kinetic Group to Czechoslovak Group...

news.vistaoutdoor.com

If I'm not mistaken, primer prices were on a plateau for the past couple years while powder prices have been rising.

In a recent Guns Magazine podcast, they reported (for the second time this year) talking to manufacturers and being warned that there is a looming nitrocellulose shortage due to increased military consumption for wars and countries that are rearming as the peaceniks lose the argument and more munitions are wanted. The world-wide production of nitrocellulose is supposedly maxxed out and that's not gonna change. Gunpowder production (or civilian availability) can get squeezed out.

The prediction was that the situation will soon be the reverse of a few years ago: primers will be abundant but powder will be unobtainium.

 

[Shanghai McCoy]

In the coming years I'd suggest you younger shooters watch your local estate sales for some "bargains".
Those of us older shooters will be leaving behind some "stuff" I am sure.

 

[lightman]

We've been seeing prices fall somewhat on ammo and primers and availability is getting better. So to answer your question, I would look at loaded ammo and primers. Without a primer, nothing happens. During the last 4 years of shortages, bullets were available. Maybe not exactly what you wanted but some were available. Brass got to be hard to find but most reloaders have a stock of brass unless they get into a new caliber. Same with powder. Something was available. Maybe not what you wanted or at a price that you liked, but a suitable substitute was likely available. But primers were non existent and you got to have a primer to make things happen.

 

[Walkalong]

Like always, keep an eye out for good deals and buy some when you find them, it adds up after a while.

 

[doubleh]

LIke only fools and newcomers predict the weather, markets and prices are not easily predicted accurately either. I can see fuel prices coming down because the incoming administration will remove the restrictions imposed on crude production by the current one. Since oil is sold as a commodity just like grain, cotton, hogs, cows, sheep, and a vast array of other things the price is determined by supply and demand and not the greedy oil companies raising prices because they can as so many seem to think. Farming and crude production are the two fields I have experience in and when supply exceeds demand prices drop, sometimes disasteriously for those of the people working in either industry. I know a bit about the Great Depression as my parents lived through it and the only thing that ended it was the US entering WWII.

I have no idea of what gun related sale prices will be but expect most to drop as there will be no panic buying induced by the incoming administration and no glut of panic firearms buyers either. Consider that a WAG on my part. My LGS owner backs me up on it and expects a slow down.

 

[jmr40]

The costs of consumer goods almost never go down. At least not if you're thinking long term. There are temporary price reductions but rarely long term price decreases.

 

[JTHunter]

IIRC, aren't a sizeable percentage of the gunpowder used in reloading come from overseas? What about the powder most manufacturers use for their products? And don't forget the brass & primers. Even if Trump's tariffs "aren't that bad", like inflation, they will cause a rise in prices.

 

[cdb1097]

I am pretty much set for the next 3-4 years, except for shot, I am down to 1 year supply, hopefully I can build that back up to 3 years supply. Plenty of Powder, Primers, and bullets (I cast my own), wads.



cdb

 

[doubleh]

And the Saudis take advantage of that by limiting the amount of oil they and their coharts produce to add to the world's supply. Sure they can produce it for peanuts but don't and won't. World demand still sets the price no matter where it comes from. More oil entering the market and the Arabs simply reduce output to keep the price up with the additional benefit of making their supply last a little longer.

Actually hydraulic fracturing simply opens the formation to allow more oil to flowto the pump. It still has to be lifted to the production systems. It has been done in this area since at least the early '60's. Frack the well, set the pumpjack. The process has been improved to be much more efficient especially when horizontal drilling is included. IE, the Permian Basin oil boom and the county I live in is the highest producing county in the nation.

 

[Terry G]

I think he's referring to the incoming administration's plans to impose tariffs on most imports and the likely trade war that would follow. Large retailers like Walmart have already issued statements indicating they would be forced to raise prices as a result. This action would be indicative of the economy as a whole, with prices increasing across the board if only "because they can", much like during and after the coronavirus lockdowns.

I'm betting you are 100% correct. I'm buying up. If I'm wrong, I still have a lot of ammunition.

 

[Mk-211]

They would like people to think, they didn't use petroleum for Teslas.

Dang those dirty little secrets!

Tesla's Mega Supercharger Counts on Diesel Generator | Sept 2023 Blog

details the impressive facility 98 chargers outside San Fran. No Elon didn’t say or do anything, but this time the presence of a diesel generator at its iconic supercharger location in Central California is creating a buzz. More info and pictures here

www.generatorsource.com

 

[Mark_Mark]

The next 3 years are going to be a buyers paradise.

Other than inflation all indicators in my mind is that we will enjoy better purchasing power on firearm related items at the expense of manufacturers, gun stores and others mismanagement.

Gun have not been effected by the last 4 years of inflation too much

I remember Glocks being $599 Pre-Plandemic and about the same now.