TRADE WITH AMERICA

Dominion, Volume 26, Issue 77, 23 December 1932, Page 3

TRADE WITH AMERICA

Effect of High Exchange IMPORTED GOODS DEARER Dominion Special Service, Auckland, Dee. 20. Although Americans may find some satisfaction in contemplating the increased number of pounds sterling their dollars will now buy, there is another side to the picture which must become increasingly prominent as time passes on. This is the adverse effect on America’s export trade caused by the high exchange. Tor some months a number of lines exclusively of United States manufacture have become practically unsaleable in Auckland, due solely to the fact that the adverse exchange, on top of the other charges, such as customs duty and freight, has raised their lauded cost to prohibitive levels. Some importers have intimated that as soon as existing stocks are cleared they will not deal in such goods until conditions become more favourable to the New Zealand buyer. An example of the effect of the high exchange is afforded by a comparison of the cost of a wireless set, valued at 100 dollars in the United States, taking the current conversion rate aud par. At the current rate of 3.18 dollars to the pound, the importer would have to pay approximately £3l/8/11 in the purchase of the set, compared with £2O/12/4 at par. Freight and insurance charges would account for an additional £4/14/3, as against £3/1/10: exchange would absorb £4/0/4, compared with £2/12/8: and customs duty and charges would total £l6/2/1, compared with £9/17/11. By the time he took delivery of the set the importer would have incurred a liability of £56 5/7. Were the exchange at par, the total cost would be only £36/4/9. Another example is provided by a light motor-car costing 500 dollars in the United States, or about £lO3 at par. Before delivery of the vehicle could be taken in New Zealand, the importer would have been obliged to pay exchange and charges amounting in round figures to £l5l, bringing the landed cost to about £3OB, against £202 at .par.