Quantifying the Impact of Chinese Import Tariffs on Amazon Prepared - - PowerPoint PPT Presentation
Excerpt from Final Presentation Quantifying the Impact of Chinese Import Tariffs on Amazon Prepared by: The Nicholas Center for Corporate Finance and Investment Banking December 6, 2018 Excerpt from Final Presentation Agenda 1. Executive
Prepared by: The Nicholas Center for Corporate Finance and Investment Banking December 6, 2018
1. Executive Summary 2. Tariff Background 3. Our Methodology and Results 4. Recommended Strategy 5. Appendix
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Executive Summary Tariff Background Our Methodology & Results Recommended Strategy Conclusion
$130Bn in 2017 (goods only) $505Bn in 2017 (goods only)
12 13 13 16 20 10 20 Electrical Machinery Vehicles Machinery Aircraft Ag
Largest U.S. Exports to China
2017, $Bn 16 26 32 110 147 50 100 150 Plastics Toys & Sports Furniture Machinery Electrical Machinery
Largest Chinese Exports to U.S.
2017, $Bn
Source: Office of the U.S. Trade Representative
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Executive Summary Tariff Background Our Methodology & Results Recommended Strategy Conclusion
0% 10% 20% Duties Collected As % of Total Imports Year
1930 1994 1947 2016
General Agreement on Tariffs and Trade (“GATT”) Created World Trade Organization (“WTO”) Created
U.S. Tariff Duties Collected As % of Total Imports
Note: Chicken Tax Tariffs were implemented in response to tariffs placed on U.S. chicken imports by France and West Germany Source: United States Trade Representative, data shows U.S. imports for consumption, duties collected, and ratio of duties to value Median Duration
Historical U.S. Tariff Actions Since 1930
Name Year Goods Rate Duration (Yrs) Chicken Tax 1964 Light trucks, potato starch, dextrin, brandy 25% 55 Japan Motorcyles 1983 Japanese motorcycles 49% 4 Japan Electronics 1987 Japanese electronics (TVs, desktops, hand tools) 100% 4 Steel 2002 Steel imports imposed by Bush 8-30% 2
1 2 3 4 1 2 3 4
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Executive Summary Tariff Background Our Methodology & Results Recommended Strategy Conclusion
25% on $50Bn 10% on $200Bn 25% on the same $200Bn
Already Implemented Delayed (as of 12/1/2018) Threatened
and 8/23/2018
(expected)
(originally)
implementation
Amazon Relevance
$255Bn
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Source: United States Trade Representative Trade Data, Peterson Institute Tariff Data
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Executive Summary Tariff Background Our Methodology & Results Recommended Strategy Conclusion
Detailed Methodology Available in the Appendix
Estimated Cost to Amazon Based on Historical Data Consumer Goods Additional Inputs Our Strategic Pricing Analysis for Amazon Intermediate Goods
sold to U.S. retail consumers
U.S. Retail
product type
to Amazon from suppliers 1 2 3
sold to U.S. retail consumers
U.S. Retail
to Amazon from suppliers
margin
1a 1b
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Executive Summary Tariff Background Our Methodology & Results Recommended Strategy Conclusion
1. We believe we have identified a valuable framework to quantify the impact of Chinese import tariffs on Amazon’s retail platform and consumers 2. Our inputs are based on publicly-available sources, so we are sure they can be improved, especially with privately-available data at Amazon 3. We have designed our models in R and Excel so that Amazon can update the key inputs and assumptions if valuable to Amazon 4. We would like to thank Amazon for the opportunity to analyze this question, it has been an invaluable learning experience for the team
9 Executive Summary Tariff Background Our Methodology & Results Recommended Strategy Conclusion