Similarly HYTE, mostly known for their PC cases, gives a remarkably detailed insight, both into their cost structure and how they are impacted by tariffs, in this video:
I'm guessing a ton of new companies will pop up overnight in India, Taiwan, Vietnam, S Korea that simply purchase components from China and resell them to the US. Not exactly helping anyone.
The interesting thing is that India already has high tariffs for goods coming from China, however this might be different for finished vs non-finished goods and for consumption vs re-export goods. The tariffs aren't cheap though. Iphones not manufactured in India and sold there are significantly more expensive due to all the tariffs.
Apple is shifting its production to India, but in reality, the phones are just assembled in India. All the components are made in China, shipped to India, where they are put together. China still captures 90% of the value
I don't know the latest, but as of like 6-8 mo ago. India hasn't been able to produce much (anything?), despite having millions of dollars of Chinese equipment ready to be put into use.
This will happen in Cambodia. They are building a massive amount of factories near Sihanoukville where the Chinese goods will be stamped with « made in Cambodia » and shipped right away to the USA.
Straightforward circumvention like that isn’t allowed (I’m not saying it won’t work). The new companies you mention would only be entitled to thelower tariffs on the value they add to the product they buy from China.
But how much visibility can the US government have into what happens between India and China? Especially if they work at hiding this stuff. I'm not saying it will work, I'm just curious. How can you tell how much of a product is made in India vs China if India and China work together to lie to you about it?
Yeah and it has no effect because its done by companies not countries. This is gonna continue for a long time. Its an incredible time to be a middle man
I thought a majority of Chinese businesses are state owned. Their neighbors understand the stakes though and have demonstrated eagerness to have low US tariff rates. I assume their customs agencies will be on the lookout for this relabeling strategy.
It's going to occur, as it already does occur, for all kinds of reasons, but it's not going to be as simple as you make it out to be. There is a limited capacity to perform this work meaning the costs may not even be competitive with the US tariff in the long run.
> I thought a majority of Chinese businesses are state owned.
That’s not how things work, they care about control not micromanaging everything. There are rules favoring majority Chinese owned companies, but that doesn’t need to be government ownership.
The CCP only really cares about large companies or specific industries like media. There’s minimal interference in a food truck and thus most companies that are small, but things get more involved as you scale. Critical industries like shipping and electricity have government owned businesses running things.
This is a known issue with tariffs, so "governments" are on the lookout for it. It's risky, and there are consequences if you get caught.
There were however reports of Chinese companies actually setting up production in e.g. Thailand. The products are more expensive then, so it doesn't actually change anything - at least it was like this before the introduction of the one billion gagillion tariffs.
> This is a known issue with tariffs, so "governments" are on the lookout for it.
not just an issue with tariffs, but with sanctions.
Guess how many companies suddenly popped up in places like kazakhstan importing electronic components and other us-sanctioned products, and then selling it to russia.
This already happened under Trump I administration. Now they are setting high tariffs on India, Vietnam, as well. Not sure whether it is to close this loophole or not.
If they had bought American floodlights they had saved 255k in tarrifs. So if they had paid 200k for the floodlights they would have still been better of.
One could argue, that there might be no American Floodlight Company - well here is the incentive to build one.
Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry.
If anything of the above comes to fruition... That's a different matter...
Floodlight companies don't appear overnight. I suspect they won't appear at all, given the instability of the tariffs and the fact that the next President (or even the current one) could wipe them off, rendering their shiny new Floodlight factory completely useless overnight. This extends to any industry.
Tariffs need to be stable and updated with several months of advance notice - otherwise they don't serve their purpose.
> Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry.
Is that what is planned? The US has a lot of dept internationally I assumed the additional money goes into paying that back, or at least stabilize the dollar somehow
During the last Trump trade war with China, there was about $28B paid out to American farmers as “Market Facilitation Payments”. So basically the taxes collected from our own tariffs went to subsidizing the impact of retaliatory tariffs. The whole thing is pretty dumb.
It harms 100% of Americans which means it harms the 50% of Americans who advocate for science, education, and health. Anything that causes any harm to this group in any way at any cost is what that other 50% wants and derives the benefit from.
It offsets the cost of cheaper Chinese labor and material costs. With the goal of making "made in the USA" products price competitive where they were not before.
In the abstract this possibly makes more jobs in the USA for manufacturing these items. It also keeps the entire process conducted in US Dollars that stay entirely within our borders which is theoretically better for currency stability and value.
How much in retail value? I've seen a few small companies that have all their manufacturing operations in China pass on tariffs at cost transparently, and for those that have already adjusted to the current rates, the surcharge is much smaller than I expected (~30%), but I don't know how margins differ by sector.
It does depend on industry, but I don’t think you should be too surprised by a 30% surcharge, and I have some math to illustrate!
Let’s assume that this 30% surcharge exactly matches the increased cost due to tariffs (I think 145%?). This would mean that 1.45*manufacturing_cost = 0.3*MSRP -> manufacturing_cost = 0.2*MSRP. The manufacturing cost is 20% of the end price. A higher surcharge would indicate that the manufacturing cost is a _higher_ percentage of the end price. Consider that they’ll also have costs due to shipping, returns, staffing, marketing, R&D, and they need profit on top. In that context, 20% seems quite reasonable to me.
Edit: you should expect to feel the highest percentage price increase in products that have become extremely commoditized, because they naturally have the tightest margins. Off the top of my head, I’m thinking toasters, microwaves, lamps, TVs, electronics cables, batteries, things like that
If you start building a factory in the US now, it will take years and you’ll be paying high tariffs on the equipment, high tariffs on the raw materials, high wages for unexperienced workers… And all of this in a political environment so unstable that your investment might be pointless six months from now if/when the president flip-flops again.
I doubt they own any part of their manufacturing at the moment.
Unless manufacturing already exists in the US (which I doubt here), I don't believe company this size has any chance to move manufacturing to the US
Ryan Pertersen (Import Genius and now Flexport) said that if these tariffs continue on China, 80% of small and medium-sized businesses that buy from China will go bankrupt. Over 2 million jobs will be lost. He is not the only one calling for a small business Armageddon. The big corporations love it, companies like Apple got exemptions, it's why you don't here them freaking out.
Hope Wyze makes it through this, long-time customer, and their cameras are great.
Big corps love it because they're at the top of the food chain. But an extinction event is an extinction event. It just takes longer for the effects to work their way up.
Small businesses are 44% of US GDP. Losing even 10% of GDP would be very uncomfortable.
In 2021, approx 500 years ago, Ryan tweeted out a series of measures intended to resolve a Long Beach port shipping jam. His measures did almost nothing and amounted to bluster and broscience. https://www.latimes.com/business/technology/story/2021-10-28...
A person was wrong once, so can be safely ignored forevermore. Shipping lane jams nor military airspace have nothing to do with the matter of tariffs GP is talking about.
And the Death-Cult of Emperor Trump will cheer it every step of the way until they finally realize (entirely too late) that they're gettin' screwed too.
The top voted comments I see are all supportive so far.
There are a lot of comments asking why they don’t move manufacturing to Seattle. This theme is common among people who don’t understand how manufacturing works right now: They don’t realize that a product like this has many different parts from different places, down to the dozens of little SMT capacitors. You can’t just move the factory and avoid tariffs because the parts still come from other places.
> This theme is common among people who don’t understand how manufacturing works right now: They don’t realize that a product like this has many different parts from different places, down to the dozens of little SMT capacitors. You can’t just move the factory and avoid tariffs because the parts still come from other places.
This argument doesn't make a lot of sense.
Suppose your company only does final assembly. Then whatever the value add of final assembly is, that's how much of the tariffs you can avoid by moving your own factory. You can eliminate as much as comes from your own contribution to the cost of the product. Meanwhile the company that makes the capacitors can avoid the tariffs on their value add by moving the factory that makes the capacitors. The fact that these are two separate companies doesn't really change much. Each one can move the part that they do.
In fact, it actually helps. Suppose the capacitor company can't move for some reason, but the final assembly can. Well, then at least you can avoid the tariffs on final assembly instead of neither if they were both made by some conglomerate that refused to move either one. Not only that, suppose other companies make the capacitors in Japan as well as China, and then the company can do the final assembly in the US and avoid the tariffs on capacitors from China by buying the ones from Japan.
I don't think there's enough manufacturing capacity in Seattle to absorb this. There are plenty of CMs here but they're small and midsized, not the big boys. And they're not in the habit of running mostly empty.
And they’re not the sort of places where you get boards for consumer electronics made. They’re doing microwave/high frequency boards for companies like Boeing.
This has been the most annoyingly infuriating part of the manufacturing conversation.
People simply don't understand the scale and complexity of modern supply chains. By one estimate, it will take $40T to move all of China's existing manufacturing capacity and supply chains to the US, and it will take 20+ years if you're really motivated.
People still think that order goes in and a factory makes the finished goods. In reality, individual parts can move across borders dozens of times before they're ready to be placed into a bigger product.
Heck, I remember reading that Ford cars built in Canada cross the Canada-US border 11 times before they're finished
> can’t just move the factory and avoid tariffs because the parts still come from other places
Trump has already started blinking on the China tariffs. It would be madness to move operations in the midst of this chaos—you’d immediately be undercut by cheaper competition.
He’s already said they will reduce the tariffs on China. He insisted there will be some tariffs but 145% is too high and it will come down.
A company moving their production anywhere based on what the policy is right now would be foolish because the policy could change in the next 5 mins, but will almost certainly change within minutes if there are empty shelves.
Are you suggesting moving operations to the US with this comment? It's the US adding all the uncertainty and instability to this environment. Having your operation based in the US makes this worse. You still have tariffs being applied to most of the components you need to assemble your product. You're now subject to more laws and rules changing overnight without the ability to plan ahead for them. If you're a company selling this product worldwide, you now have 100% of your operations subject to uncertainty vs. say 30% that was destined for the US market to begin with.
This is why you won't hear many reports of companies paying these huge tariffs. Wyze is big enough to eat the high costs on some of their imports. Most companies will redirect their shipments to Europe and Africa and pause sales in the US until the situation becomes more stable.
In another reply Wyze said they too paused most of their shipments but decided to eat the cost of this one because it was for a commitment to a retailer.
So I manufacture cycling products from Taiwan + China, importing to US... he's paying 152% tariffs, on the cost price of the product. Previously would have been like 7% base, with maybe a 20% trade war tarriff added on.
So for back of napkin: $10 widget, selling for eg $40.
This has been written about in so many articles and discussed so extensively on HN and many other forums over the last month that it's hard to believe your stated lack of knowledge.
Higher, most goods don't have import taxes, or rates were less than 10 percent. Looks like the rates for wall mounted lights were previously 5 percent.
And even if the factory where they're assembled is in the US, they still need to import the materials/components from...most likely not the US; that's why CyberPower is looking awfully grim atm, assembly in the states, but they won't be able to make the cost of the materials remotely worth it for that reason.
https://www.youtube.com/watch?v=1W_mSOS1Qts&t=1394s
They also address the question of moving their production to the US.
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