I work in corporate finance so I try to put things in journalist terms. However, most larger firms are accessing the effects of tariffs on margins and delaying any immediate action. There are teams of people looking at this stuff. This is both in terms of markets here and abroad. You are buying from and selling to places all over.

In short, large firms are less sensitive to short term changes in margins AND more adept at understanding how to react in the longer run.

Small firms often have no such luxuries. No sophisticated teams of analysts. And a much greater sensitivity to fluctuations in transaction costs. If China is a big buyer of a small firm, they are fricked. If China makes one part that you have to have and no one else can, you are fricked (the government actually has a tariff waiver program for this).

This post was edited on 6/11/19 at 10:59 am

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Posted by NC_Tigah

Carolinas

Member since Sep 2003

124189 posts

Posted on 6/11/19 at 1:08 pm to pizzatiger

quote:
I work in corporate finance so I try to put things in journalist terms

I'm not a journalist.
I have owned and run businesses.

SWOT analyses were something that comprised a significant amount of energy at annual meetings. Anticipating/understanding risks and mitigation were something we spent considerable time addressing at board meetings.

Hence the questions.

Left unfettered, large corporations are better set to lever cheap foreign manufacturing, and use that leverage as an entry-growth barrier vs smaller companies. They are also better set to fully appreciate any anti-American costs of doing so. Pardon me for not shedding tears for any of them in this situation.

quote:
Small firms often have no such luxuries. No sophisticated teams of analysts. And a much greater sensitivity to fluctuations in transaction costs.

Again, business success is contingent on risk mitigation. The same is true of investment. Diversification is a key component in risk mitigation.

quote:
If China is a big buyer of a small firm, they are fricked.

Interesting hypothetical. Any actual examples of a small firm exporting in bulk to China.

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Posted by bfniii

Member since Nov 2005

17840 posts

Posted on 6/11/19 at 1:33 pm to pizzatiger

quote:
Small firms often have no such luxuries

and this is the same old story because orangemanbad people never mention that these particular companies were ALREADY feeling pain due to the existing situation. they act like these tariffs created pain out of nothing and trump was stupid for doing it.

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