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How on earth could a startup provide that service legally?
by kec 8y ago
How on earth could a startup provide that service legally?
- jerkstate 8y agoby manufacturing in the US, perhaps
- slavik81 8y agoHow is that "importing"?
- odorousrex 8y agoHow does that dodge the tariffs? (Legally) Let's say I'm Apple. I make MacPro's in Ft. Worth, Texas. The parts come from China. I now have to pay 25% more on those parts. However, since I'm Apple, I have manufactures making iPhones in China. So rationally, my best bet is to shut down my US based plant in Texas and move MacPro manufacturing to one of my factories in China. That way I legally dodge the tariffs since the finished MacPros are NOT taxed. While this is good for China, and a net zero for Apple, it kind of sucks for the poor American workers in Texas who are now out of a job.
- will_brown 8y agoSay you are Apple... You create a Foreign Trade Zone, ship your components there and manufacture there...you don’t pay tariffs on those Chinese components. Now the idea with political cronies/tech start ups that can raise SV funding, they will create one and turn around and offer manufacturers the opportunity to use the zone for their manufacturing (a la the Uber of Foreign Trade Zone/Free Trade Zone) Edit: Just checked, and as one might expect Apple already operates out of Foreign Trade Zones
- odorousrex 8y agoThat is actually rather clever, and will probably work for many smaller US manufacturers but it will still cause them to have to raise their prices slightly, as there is now another middle man they have to pay. However enterprises like Apple will still find it cheaper to move to China. VC may be reluctant to invest in such startups due to the fact that the current administration has been, how shall we put it...inconsistent? They are just as likely to revoke the tariffs in a month as they are to change the goods covered under it or expand it. Either change could make such a startup completely obsolete in no time at all.
- seanmcdirmid 8y agoI don’t think the USA has SEZs like China does.
- will_brown 8y agoStep 1: create what is called in the US a foreign trade zone (internationally Free Trade Zone) Step 2: get VC to give you funding at ridiculous valuation Step 3: market yourself as “tech” start up, that is hacking the (new) law, and disrupting globally industry (of course said start up isn’t actually doing anything new that the manufacturing industry hasn’t always done) Sources: I was involved in one for an e-bike manufacturer (set up right next door to a craft brewery) https://en.m.wikipedia.org/wiki/Foreign-trade_zones_of_the_United_States https://en.m.wikipedia.org/wiki/Foreign-trade_zones_of_the_U... https://www.cbp.gov/border-security/ports-entry/cargo-security/cargo-control/foreign-trade-zones/about https://www.cbp.gov/border-security/ports-entry/cargo-securi...
- lozaning 8y agoThe first sentence of the 4th paragraph of your second link would seem to dispute your strategy. "Under zone procedures, the usual formal CBP entry procedures and payments of duties are not required on the foreign merchandise unless and until it enters CBP territory for domestic consumption" So the minute your startup sells me a chip for use in the US and it then leaves the free trade zone the tariff becomes due.
- will_brown 8y agoIf I am importing a chip and reselling it I am not a manufacturer and yes I pay the tariff. If I import the chip and use it as a component in my manufacturing of the end product I don’t pay the tariff on that chip. The idea of the startup, as I mentioned in another comment, would be creating the zone and charging manufacturers to use my Zone. Like an Uber or On demand or WeWork (whatever SV analogy works best for you) of Foreign Trade Zones.
- CodeCube 8y agoAnd these "startups" would certainly charge a premium for access to their services/zone ... so the "end user" still ends up footing the bill.