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Cost of raw materials? What raw materials are we importing to build factories? As for consumer goods, the Chinese didn't raise their prices, they ate the cost
by hourislate 5y ago
Cost of raw materials? What raw materials are we importing to build factories?
As for consumer goods, the Chinese didn't raise their prices, they ate the cost of that tariff. The price increases we are seeing are almost entirely related to shipping costs. Manufacturers who have long term contracts or their own leased vessels (Walmart), are still able to deliver and keep prices in check.
- bunnie 5y agoEverything from motors to steel to conveyor belts to soldering irons to laser cutters to CNC machines to metrology equipment? It turns out China is good at making factories, because they make a lot of them. whereas most small to mid size b2b equipment makers in the USA have shuttered manufacturing operations. The brand may have an HQ in the USA but the factory - or more importantly, key vendors for subassemblies even if the 'last screw' happens in the USA - frequently have tie-ups in China. I personally haven't had any vendors in China eat the cost of tariffs. Export terms are often FOB or EXW which means variable tariff costs get eaten by the importer or distributor. Even if a large buyer like Walmart owns/jv/leases a facility in China, to say the tariff is borne by the China entity is like saying money in the left pocket is different from money in the right pocket... eventually the cost catches up to them. It'd be helpful to share citations on arrangements where the manufacturer simply ate the cost of the tariff, it could help to educate a lot of struggling importers and small businesses.