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:
They also address the question of moving their production to the US.
danesparza · 2h ago
This is a fantastically detailed video. Thank you for sharing this! Everybody on HN should watch this video to get an inside view of what businesses are going through in America right now.
I of course feel for them as a small business. They took risk and did the numbers and are trying to bring something great to their customers.
One angle I didn’t see covered in response… dropping the quality on the product. If America just isn’t there yet on manufacturing, and people still only want to pay $139 for a computer case… surely someone in America can sell the customer a box of some sort for $139. It might be pretty crap, but there’s already local industry selling trailers and park benches and other things made out of metal. A barebones steel case seems within reach for $139, and they can improve from there.
glimshe · 32m ago
This. I can't understand why people don't see it. Of course we can't rebuild what China does overnight. But we can create new supply chains at a lower quality point and then climb back to our original level. I've seen it happening all over the world.
I never believed that Trump's main goal is to bring everything back to the US. Instead, the government wants a new blend of suppliers that leans more heavily on the US but diversifies inputs to many countries.
This is a worthwhile goal even if China was an US ally. We don't want all eggs in one basket.
almosthere · 6h ago
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.
JumpCrisscross · 2h ago
> 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
The reality in high-tariff economies is simpler: more people just forge customs paperwork.
whatevermom · 6h ago
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.
edit: decades ago, I worked in a lab that was sequencing the genome of the Dengue virus (back when sequencing DNA was a Herculean task)
oatmeal_croc · 3h ago
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.
spaceman_2020 · 4h ago
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
itake · 4h ago
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.
mayama · 18m ago
India has been producing mobiles for local consumption for few years now. Sure, almost everything was imported initially. But, recently govt is targeting PLI for specific mobile components like PCB, screen, camera modules, enclosures etc. CPU/SOC still has to be imported though. 10% of apple iphones are already manufactured in India.
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.
lucianbr · 3h ago
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?
mayama · 14m ago
Regarding India, Indian govt already has huge tariffs and non tariff barriers on China. They imposed many of those during Galwan valley standoff and later extended them when they are promoting manufacturing or PLI for specific sectors. Indian govt and local Indian manufacturers won't allow middlemen to come and relabel items and eat in to their share of the pie. Sure, with the corrupted Indian bureaucracy some relabling will still go through, but it wont be much. Not sure how US plans to deal with relabling in Cambodia, Mexico etc. though.
aiiizzz · 6h ago
The executive order came with threats against any country doing that
vijaybritto · 5h ago
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
timewizard · 4h ago
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.
mayama · 9m ago
Long term it will work. If foreign govt allow getting around tariffs, according to trump import deficit formula, tariff on the govt will go up. Usgov could also increase tariff on countries with more companies doing tariff shenanigans. The problem is with american 2 year election/midterm cycle no one believes that this will last more then 3-6 months now.
rsynnott · 2h ago
> I thought a majority of Chinese businesses are state owned.
Where'd you get that? The state has a significant (though usually less than controlling) ownership stake in about 1.5% of Chinese businesses, and at least _some_ ownership in about 2%.
"The state owns some of this" is, of course, not equivalent to "the state meaningfully controls this".
But in any case for this sort of activity you'd probably just establish new companies, which the state wouldn't have any share in anyway. And, also, this is kinda academic, because you wouldn't be doing it in China, you'd be doing it in some third country and transhipping goods originating in China.
Retric · 3h ago
> 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.
megablast · 5h ago
Is it a country doing it??
Would a country be able to track that??
rsynnott · 2h ago
With the exception of command economies (basically just North Korea, these days), this sort of thing would generally be done by companies, not countries.
And, y'know, eh, Trump says a lot of things.
jillyboel · 3h ago
It's just a few shell companies doing stuff. Good luck stopping them.
locallost · 5h ago
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.
chii · 5h ago
> 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.
miohtama · 4h ago
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.
danesparza · 2h ago
Adafruit (an electronics manufacturer and retailer here in the United States) has been sharing insights in a video series called 'Tariff talk' as well: https://youtu.be/y36XchXA8BU
voidUpdate · 4h ago
Could someone explain to an idiot like me what the benefit of this is to the americans?
number6 · 4h ago
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...
oatmeal_croc · 3h ago
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.
badestrand · 3h ago
It still is a very possible effect.
Yes, less chaos and more predictability would be better obviously but the theoretical foundation is somewhat solid.
atwrk · 2h ago
Thanks to the chicken tax we already know how this will develop: The US floodlight company will sell those US-made lights these lights for ~400k (so at the margin of market price plus tariffs), and no one outside the US will want to buy them. This is literally what already happened with the US car industry.
glimshe · 27m ago
There are many companies all over the world focused on local markets. The car industry is strategic, but I wouldn't mind buying a floodlight from a company that doesn't export anything.
ahstilde · 17m ago
So you want a worse floodlight at a higher price because of government protection?
badestrand · 2h ago
> 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.
Alternatively the taxes can be lowered so that overall the American consumers don't lose buying power (imports get more expensive but people also have more money to spend).
herbst · 4h ago
> 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
lurkshark · 3h ago
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.
worik · 3h ago
> Like a tax,
It is a tax
badestrand · 3h ago
A tax on foreign labor, to be exact. (Not foreign products or materials per se).
atwrk · 2h ago
Actually it's an import tax - the importer pays it, not the foreign worker.
nojvek · 2h ago
> state can now subsidise local floodlight industry.
Ha! State wants to cut taxes for corporations and billionaires. That’s where the money is most likely going to go.
Inflation go brrrr!
twoodfin · 1h ago
Negatively polarize the Democratic Party out of their anti-trade posturing (sweatshops! outsourcing pollution! look at the rust belt!) for a generation?
danesparza · 1h ago
Huh?
twoodfin · 1h ago
Both Bill Clinton and George W. Bush were huge free traders, and Barack Obama largely carried on that bi-partisan tradition.
But the resurgent left of the Democratic Party, inspired by the anti-WTO “Battle of Seattle” and led by folks like Elizabeth Warren, made free trade toxic to enough of the party that Hillary Clinton in 2016 felt she needed to come out against Obama’s Trans-Pacific Partnership which she herself had taken a lead in negotiating.
Trump ostensibly killed it, but it was already dead. Even an incredibly beneficial trade agreement—both economically and strategically—had no constituency of consequence on Capitol Hill. With Trump’s “help” maybe one will reemerge.
thih9 · 3h ago
Some people from the companies that will go bankrupt as a result of that will be able to find work assembling floodlights.
bgro · 3h ago
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.
fxtentacle · 2h ago
American products are too expensive, so nobody buys them. Import taxes make imported products more expensive so that they are even more expensive than the American products. The hope is that this makes it cheaper for American consumers to buy American products than to buy imported products.
But the elephant in the room is that the American-made products are now so expensive that you cannot profitably export them to any other country. So you have effectively limited the market size to purely the internal American market. And that means Chinese companies might have much better economies of scale. Because they can capture customers worldwide and not just inside America.
But most likely, the house of cards will fall over before you ever ship the first American-made product: Headlights need injection-molded parts. Since this was historically almost fully outsourced, the U.S. has almost no production capacity in this area. Building these factories takes 2 to 5 years. That means, unless everyone is fully convinced that these taxes will stay in effect for at least 5 years, nobody is going to build the necessary manufacturing capacity. And good luck finding US investors who are happy to invest millions into a factory with a predicted 5% profit margin.
rasz · 1h ago
Straight from the horses caretaker mouth
Lutnick: "It's time to train people not to do the jobs of the past, but to do the great jobs of the future. This is the new model where you work in these kinds of plants for the rest of your life and your kids work here and your grandkids work here. We let the auto plants go overseas."
United States Secretary of Commerce ladies and gentlemen!
timewizard · 4h ago
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.
pyrale · 2h ago
Of course it what you describe is a lasting situation, no one outside of the US would buy from an industry that is only propped up by subsidies, whose product is available for cheaper elsewhere, and likely subject to counter-tariffs. From there, the USD-labelled trade outside of the US would decrease, which makes it a less interesting proposition for foreign companies to hold USD, and, by extension, T-bonds.
US companies that actually made viable products for the international market would now have to compete with artificially subsidized companies on their costs, risk getting caught in tariffs, and, unless they build a critical product, probably see their international sales decline.
herbst · 3h ago
In Theorie of a crazy orange men and a spaced out tech billionaire
rsynnott · 2h ago
Even the spaced out tech billionaire seems a bit uncomfortable with it; it's mostly just Trump's fixation.
pavlov · 4h ago
So why not make them in the country? Let’s see…
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.
World-class industrial strategy.
averageRoyalty · 2h ago
For the non Americans, it appears Wyze is a smart home company currently specialising in cameras, founded by ex Amazon (retailer) employees. I assume these floodlights are "smart" in some way.
bananalychee · 4h ago
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.
pinkmuffinere · 4h ago
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
Scottn1 · 1h ago
Tarrifs have started to hit the boardgame industry pretty hard already, and as an enthusiast, I have started to really worry. Within a very short span, several companies have already announced drastic slowdowns in product production/shipments and staff, to some outright closing.
Will they have to pay tariffs on the equipment they have to import to manufacture them here?
tpetry · 5h ago
For sure. The tariffs don‘t make a difference of finished products vs parts of a product.
lucianbr · 2h ago
Production equipment and tooling isn't even parts, it's finished products. So yeah.
Timshel · 4h ago
I think the point is kind of moot.
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.
TheOtherHobbes · 4h ago
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.
carabiner · 7h ago
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.
putlake · 6h ago
Shipping lanes is more Peterson's area of professional expertise, isn't it? He's not an economist.
sleepyguy · 7h ago
Well, we have a front row seat to the shitshow. It will play out in front of everyone to see the results in real time.
blooalien · 6h ago
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.
bn-l · 4h ago
You realise this is just as deranged right?
therealfiona · 8h ago
They bricked my light bulbs that I bought a few years ago. I'd have more sympathy had they not locked me out from using them.
danesparza · 1h ago
From a "humorous absurdity" point of view, I kind of love this comment. It has just the right amount of pettiness and vindictive sentiment -- with just a hint of "tone-deaf". Bravo!
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.
exmadscientist · 8h ago
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.
bigfatkitten · 6h ago
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.
AnthonyMouse · 3h ago
> 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.
lucianbr · 2h ago
So moving one factory helps reduce the impact of tariffs on the final product from 145% to 135%, and to reduce it to zero you would have to move hundreds of factories, with tiny gains at each step.
I think the original argument makes a lot of sense, and yours does not. "Just move two hundred factories on a different continent" might as well be "just invent a time machine".
spaceman_2020 · 4h ago
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
JumpCrisscross · 8h ago
> 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.
hshdhdhj4444 · 4h ago
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.
herbst · 3h ago
In the same sense any company still operating in a environment like this and not moving their operation to a stable country is foolish to begin with
teagoat · 3h ago
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.
herbst · 2h ago
Absolutely. To be fair I don't am in this situation (gladly) but I would assume the best way is to focus on other markets and wait this out.
spuz · 3h ago
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.
lurkshark · 3h ago
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.
Timshel · 4h ago
In a way it's worse since, you can't make plan to move if they become obsolete in 2 months but can you afford/survive waiting ...
netsharc · 2h ago
Hah, so Trump II is comparable to the start of the Covid pandemic: "we'll just have to hunker down and wait".
rsynnott · 2h ago
Oh, yeah, that is _very_ much how the markets are treating it. The idea that these tariffs might be _permanent_, is very much not priced in, at least not for the moment.
netsharc · 2h ago
I'm looking more at the amusing angle of "Sir, the markets are comparing your reign as president to the pandemic.".
wickedsight · 3h ago
I also find it interesting that there's this apparent idea that the US needs companies to move manufacturing to the US to improve... Something.
The US is 9th in GDP per capita and has a historically low unemployment rate. I really don't understand what problem they're trying to fix here.
ncruces · 4h ago
People reply to the “Good morning Vietnam” post with “OK, so the plan is working” and “you'll do in 60 days what you tried to do for a year.”
Who are these people?
JSR_FDED · 4h ago
Not sure, but I can tell you how they voted.
blitzar · 3h ago
Hostile and political. Fake news - everyone knows China paid. (/s)
danesparza · 1h ago
lol! OMG this is an amazing comment.
techpineapple · 8h ago
Feels like maybe the tariffs are working if they’re talking about moving their production stateside?
waxpancake · 7h ago
They said they’re looking to “move out of China,” but that almost certainly doesn’t mean the U.S. Probably India or Vietnam, maybe Turkey or Malaysia.
0_gravitas · 7h ago
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.
kalleboo · 6h ago
Their own reply to themselves is a gif of Robin Williams yelling "GOOD MORNING VIETNAM"
sam_goody · 4h ago
I have seen this comment a lot and don't understand it.
From the U.S.'s point of view there are two goals: increase manufacturing in the States, and reduce manufacturing in China.
Even if they don't choose the States, and even if things aren't near-shored, it is still a pretty big win for the administration, no?
Mashimo · 4h ago
If that was the goal, then why did Trump pull out of Trans-Pacific Partnership (TPP)?
As far as I understood it, it was meant to work closely with a lot of east Asias counties to counter the influence of China and to promote trade.
Now the US kinda pissed of a lot of those countries, and china stepped in to trade with them.
Timshel · 4h ago
Their answer to moving to the US:
> Obviously we’d love to move our factories back home to Seattle. We just need to figure out to make the rain in Seattle power an assembly line.
https://www.youtube.com/watch?v=1W_mSOS1Qts&t=1394s
They also address the question of moving their production to the US.
I of course feel for them as a small business. They took risk and did the numbers and are trying to bring something great to their customers.
One angle I didn’t see covered in response… dropping the quality on the product. If America just isn’t there yet on manufacturing, and people still only want to pay $139 for a computer case… surely someone in America can sell the customer a box of some sort for $139. It might be pretty crap, but there’s already local industry selling trailers and park benches and other things made out of metal. A barebones steel case seems within reach for $139, and they can improve from there.
I never believed that Trump's main goal is to bring everything back to the US. Instead, the government wants a new blend of suppliers that leans more heavily on the US but diversifies inputs to many countries.
This is a worthwhile goal even if China was an US ally. We don't want all eggs in one basket.
The reality in high-tariff economies is simpler: more people just forge customs paperwork.
heavy surf punk guitar squeals in
edit: decades ago, I worked in a lab that was sequencing the genome of the Dengue virus (back when sequencing DNA was a Herculean task)
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.
Where'd you get that? The state has a significant (though usually less than controlling) ownership stake in about 1.5% of Chinese businesses, and at least _some_ ownership in about 2%.
"The state owns some of this" is, of course, not equivalent to "the state meaningfully controls this".
But in any case for this sort of activity you'd probably just establish new companies, which the state wouldn't have any share in anyway. And, also, this is kinda academic, because you wouldn't be doing it in China, you'd be doing it in some third country and transhipping goods originating in China.
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.
Would a country be able to track that??
And, y'know, eh, Trump says a lot of things.
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.
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.
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...
Tariffs need to be stable and updated with several months of advance notice - otherwise they don't serve their purpose.
Yes, less chaos and more predictability would be better obviously but the theoretical foundation is somewhat solid.
Alternatively the taxes can be lowered so that overall the American consumers don't lose buying power (imports get more expensive but people also have more money to spend).
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
It is a tax
Ha! State wants to cut taxes for corporations and billionaires. That’s where the money is most likely going to go.
Inflation go brrrr!
But the resurgent left of the Democratic Party, inspired by the anti-WTO “Battle of Seattle” and led by folks like Elizabeth Warren, made free trade toxic to enough of the party that Hillary Clinton in 2016 felt she needed to come out against Obama’s Trans-Pacific Partnership which she herself had taken a lead in negotiating.
Trump ostensibly killed it, but it was already dead. Even an incredibly beneficial trade agreement—both economically and strategically—had no constituency of consequence on Capitol Hill. With Trump’s “help” maybe one will reemerge.
But the elephant in the room is that the American-made products are now so expensive that you cannot profitably export them to any other country. So you have effectively limited the market size to purely the internal American market. And that means Chinese companies might have much better economies of scale. Because they can capture customers worldwide and not just inside America.
But most likely, the house of cards will fall over before you ever ship the first American-made product: Headlights need injection-molded parts. Since this was historically almost fully outsourced, the U.S. has almost no production capacity in this area. Building these factories takes 2 to 5 years. That means, unless everyone is fully convinced that these taxes will stay in effect for at least 5 years, nobody is going to build the necessary manufacturing capacity. And good luck finding US investors who are happy to invest millions into a factory with a predicted 5% profit margin.
Lutnick: "It's time to train people not to do the jobs of the past, but to do the great jobs of the future. This is the new model where you work in these kinds of plants for the rest of your life and your kids work here and your grandkids work here. We let the auto plants go overseas."
United States Secretary of Commerce ladies and gentlemen!
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.
US companies that actually made viable products for the international market would now have to compete with artificially subsidized companies on their costs, risk getting caught in tariffs, and, unless they build a critical product, probably see their international sales decline.
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.
World-class industrial strategy.
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
https://stonemaiergames.com/we-are-suing-the-president/ https://www.cmon.com/press/an-update-on-our-internal-teams-a... https://www.greaterthangames.com/blogs/news/greater-than-gam...
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
The GamerNexus video already mentioned elsewhere explore those issues: https://www.youtube.com/watch?v=1W_mSOS1Qts.
Hope Wyze makes it through this, long-time customer, and their cameras are great.
Small businesses are 44% of US GDP. Losing even 10% of GDP would be very uncomfortable.
He also doesn't understand the concept of commercial airliners avoiding military airspace: https://www.reddit.com/r/ATC/s/1bTyTpBsqb
They’re getting attacked in the replies.
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 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 think the original argument makes a lot of sense, and yours does not. "Just move two hundred factories on a different continent" might as well be "just invent a time machine".
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
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.
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.
The US is 9th in GDP per capita and has a historically low unemployment rate. I really don't understand what problem they're trying to fix here.
Who are these people?
From the U.S.'s point of view there are two goals: increase manufacturing in the States, and reduce manufacturing in China.
Even if they don't choose the States, and even if things aren't near-shored, it is still a pretty big win for the administration, no?
As far as I understood it, it was meant to work closely with a lot of east Asias counties to counter the influence of China and to promote trade.
Now the US kinda pissed of a lot of those countries, and china stepped in to trade with them.
> Obviously we’d love to move our factories back home to Seattle. We just need to figure out to make the rain in Seattle power an assembly line.