A 10-Point Tariff Change and Landed Cost: A Sensitivity Table

Worked example (invented numbers)

Suppose an edge has these costs per unit, all made up:

• Factory price: 100.00
• Freight and insurance to port: 12.00
• Dutiable value (assume factory price here for simplicity): 100.00
• Broker, handling and inland freight: 14.00

Each ten-point step adds 10.00 per edge in this example, about 8% of landed cost at the start. If an order is 500 edges, a ten-point step is 5,000 on the order.

What the simple table leaves out

A simple table is a first approximation, and the fees it misses are usually the ones that scale with value.

• Some fees are calculated as a percentage of value, so they may move too.
• The dutiable value rules vary; freight may or may not be included.
• The supplier may share or shift cost, and the currency may move.
• Quantity breaks and freight change per-unit cost.

How to build your own

Landed cost is a small model, and building it once makes every future quote comparable.

1. List all cost lines per unit and mark which depend on value. Freight usually does not; duty and fees usually do.
2. Ask your broker for the dutiable value basis and the current duty and fees. The basis matters as much as the rate.
3. Build a table with the duty rate as the variable and landed cost as the result. That is the sensitivity you are buying against.
4. Add a second table for order quantity. Fixed costs per shipment behave differently at volume.
5. Use it in negotiations and in the decision to order now or later. A model you never open is just a spreadsheet.

Limits

All numbers are invented. The table shows method, not any market or measure.

Two-way sensitivity

Extend the table with factory price on the other axis, in steps of five percent. A two-way grid shows whether a supplier’s discount or a duty change matters more to the final landed figure.

Boundary: Every figure is invented to show method; no real duty rate, measure or price is stated, so verify yourself with your broker.