Demo 09 · Cost shock simulator
Replay 2026.
Tungsten, tariffs and freight move on three clocks. Your prices move on one. Tungsten (APT) nearly doubled between January and mid-February 2026. A new duty lands in April, and refunded duties come back in June to whoever imported the goods. Diesel climbs all year. Watch each cost reach your system and then your one sell price, see what the lag costs a distributor, and choose what happens on the way back down.
The simulator
- Vendor cost
- System cost
- Your sell price
- Your margin
- Out of tolerance
- Reprice-once habit
- Cost clock (own scale)
- Tariff, refund fully passed back
Your policy: 26.08% gross margin for the year, 192 basis points under plan, a lag tax of $1.1M (2.9% of revenue) and 317 days out of tolerance. The reprice-once habit would lose $2.1M. Separately, $114K of refunded duty never reaches your cost.
The refund nobody books.
When a duty is struck down, the refund goes to whoever imported the goods. Grainger recognized refunds on IEEPA tariffs for products it imported directly, cutting its cost of goods sold by $43 million in Q2 2026 (Grainger 8-K, 4 Aug 2026). On goods your suppliers imported, the refund lands on their books. Whatever they do not pass back stays in your system cost, so your margin report never shows it. It is money to ask your suppliers for, not a lag.
The refunded duty size, the June 1 date, the months refunded and the share passed back are illustrative. Set them in Assumptions and with the “refund your suppliers pass back” slider.
Everyone models the rise. Almost nobody governs the fall.
Tungsten has not fallen this year: in July it was still up about 550% in 14 months (Cutting Tool Engineering, Jul 2026), so the replay holds it high. Press to see the fall, and what a written giveback policy keeps.
Hands back 100% of every cost drop the day the market falls, while you still sell stock bought at the high cost. Worst month margin: 19.75%.
Gives back 50% of each drop, once the old-cost stock has sold through. Margin kept above plan: $0.
Set the shock. Set your policy.
Every slider moves the chart live. Keyboard: tab to a slider, then arrow keys; Page Up / Down for big steps.
3 · Assumptions behind the fictional distributor Edit
Round, plausible numbers for Meridian Sample Supply (fictional). Replace any of them with yours. Volume is held constant and customer reaction to price is not modeled.
The chart as a table · month by month Open
| Month | Tungsten | Tariff | Freight | Vendor cost | Your sell price | Your margin | Habit margin |
|---|---|---|---|---|---|---|---|
| JAN | +0.1% | +0.0% | +0.0% | +0.1% | +0.0% | 28.00% | 28.00% |
| FEB | +9.3% | +0.0% | +0.1% | +9.3% | +0.0% | 27.34% | 27.34% |
| MAR | +9.5% | +0.0% | +0.2% | +9.7% | +0.0% | 22.05% | 22.05% |
| APR | +9.5% | +2.5% | +0.4% | +12.3% | +0.1% | 21.74% | 21.04% |
| MAY | +9.5% | +2.5% | +0.5% | +12.5% | +8.3% | 24.82% | 19.75% |
| JUN | +9.5% | +2.2% | +0.7% | +12.4% | +8.7% | 25.53% | 23.44% |
| JUL | +9.5% | +2.2% | +0.9% | +12.6% | +11.0% | 27.06% | 24.14% |
| AUG | +9.5% | +2.2% | +1.0% | +12.7% | +11.1% | 27.07% | 25.27% |
| SEP | +9.5% | +2.2% | +1.0% | +12.7% | +11.3% | 27.11% | 25.29% |
| OCT | +9.5% | +2.2% | +1.0% | +12.7% | +11.4% | 27.17% | 25.34% |
| NOV | +9.5% | +2.2% | +1.0% | +12.7% | +11.5% | 27.23% | 25.41% |
| DEC | +9.5% | +2.2% | +1.0% | +12.7% | +11.6% | 27.25% | 25.46% |
What you just watched
Three clocks. One price.
Tungsten moved in February. The tariff clock stepped up in April and, for duties that were struck down, ran backwards in June, but only for whoever imported the goods. Diesel climbed all year (up 68.1% year on year by mid-September, EIA via DSG), and freight surcharges arrive with no price letter. In the 2Q26 Baird-NAW Industrial Distribution Survey, as analyzed by MDM, 91% of distributors said their answer to rising costs is to raise prices, even though those costs arrive through several channels on different clocks. Most price files still move on one clock. Every day between a cost clock and the price clock is margin paid out of your pocket.
The fall is the part almost no one plans. When the market drops, customers hear about it at once. Give it all back that day and you sell stock you bought at the high cost at the new low price. A governed giveback hands back a share of the drop that you choose, once the old-cost stock has sold through, and keeps the difference. The 50% in the “Governed” preset is illustrative, not a recommendation; set your own.
An illustrative model, not a forecast or a promise of results. It holds volume constant and does not model customer reaction to price. Your numbers will differ; that is the point of measuring them.
Margin Guard · monthly desk
Watches all three clocks, every month.
Watches cost against price every month so a tariff or tungsten move never sits in your margin.
- Tungsten, tariff and freight against system cost against sell price, SKU by SKU
- Refunded and removed duties chased back from suppliers, not left in your cost
- Repricing lists sized in dollars before the lag compounds
- A written giveback policy for the way down, applied the same way every time
$3,500/mo starting at
Not ready for a desk? The Margin Diagnostic ($5,000) measures your real price file first.
Sources & defaults
Where every default comes from
- Fastmarkets — Tungsten 2026: geopolitics sets global tone (Claire Patel-Campbell, 18 Mar 2026)Shape of the raw-material rise: APT (88.5% WO3) around $900–940 per mtu in January 2026 and $1,650–1,900 by mid-February, as the squeeze that followed China’s February 2025 export licensing of APT continued. Default peak move +90%. The curve is a stylized index, not licensed price data.
- Cutting Tool Engineering — Material Matters: Reducing Carbide Use as Tungsten Prices Rise (15 Jul 2026)Why the default holds tungsten at its peak through year end: in July 2026 tungsten APT was still up about 550% in 14 months. A fall later in the year is shown only as the “What if tungsten falls?” preset.
- MDM — Research: Your Costs Changed in 3 Places During 2Q26. Your Pricing Changed Once.The three-channel cost pattern, and the topline answer in the 2Q26 Baird-NAW Industrial Distribution Survey: 91% of all respondents raise prices. Frames the “three clocks.”
- Federal Register — Proclamation 10947, Adjusting Imports of Aluminum and Steel Into the United States (FR Doc. 2025-10524, 9 Jun 2025)For scale only: Section 232 duties on steel and aluminum rose to 50% on 4 Jun 2025; since 6 Apr 2026 (Proclamation 11021) articles made almost entirely of steel, aluminum or copper pay 50% on full value and listed derivatives 25%. The 25% default duty on 10% of purchases is illustrative.
- W.W. Grainger, Inc. — Form 8-K, Exhibit 99.1: second quarter 2026 results (4 Aug 2026)The tariff clock’s refund leg: Grainger recognized refunds on IEEPA tariffs for products it imported directly, which reduced its cost of goods sold by $43 million in Q2 2026. On goods your suppliers imported, the refund lands on their books, and only the share they pass back reaches your cost. The refunded duty size, the refund date (June 1) and the share passed back are illustrative.
- Distribution Strategy Group — Record Diesel Prices Force Distributors to Rethink Freight, Pricing and Fleet Costs (Mark Brohan, 17 Sep 2026), citing the U.S. Energy Information AdministrationThe freight clock: U.S. on-highway diesel averaged $6.285 a gallon for the week of 14 Sep 2026, up 68.1% year on year (EIA). The default applies +68% as the move across the year; the ramp shape, freight’s share of purchases and fuel’s share of freight are illustrative.
- Federal Register — Proclamation 11021, Strengthening Actions Taken to Adjust Imports of Aluminum, Steel, and Copper (FR Doc. 2026-06960; signed 2 Apr 2026, effective 6 Apr 2026)The rules in force since 6 Apr 2026: 50% on the full value of articles made entirely or almost entirely of steel, aluminum or copper; 25% on listed derivatives; products with 15% or less metal content exempt.
- Practitioner estimateThe “Broadline MRO” profile’s carbide share (5–10% of purchases; the preset uses 7.5%) is a distribution practitioner’s estimate, not survey data. The “Metalworking specialist” 30% is the fictional distributor’s own assumption.
- IllustrativeRevenue, margin plan, tolerance, purchase shares, lags, repriced share and giveback (including the governed preset’s 50%) are round, plausible numbers for a fictional distributor, not anyone’s real pricing rule. So are the refunded duty’s size, date and months, the share of the refund passed back, freight’s share of purchases, fuel’s share of freight and the diesel ramp. Edit them. The tungsten curve is a stylized index, not licensed price data: it holds at the peak through year end, and the “What if tungsten falls?” fall is illustrative. Presets reviewed quarterly; as of 17 Oct 2026.