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My first reaction is that this just pushes up the price point for an entire segment of the industry for U.S. customers, but it doesn't seem like it would outrig

by bicx 1y ago

My first reaction is that this just pushes up the price point for an entire segment of the industry for U.S. customers, but it doesn't seem like it would outright _kill_ companies like this. But then I thought a bit deeper. Any small company that relies on profits from the last batch to fund the next batch will certainly just be killed or need to acquire debt to fund purchasing of parts/stock under new tariffs. That really sucks for small manufacturers.

leptons 1y ago
I was just about to launch a small business based on a circuit I designed and had manufactured in China. The business also relies on LEDs that are simply not available outside of China. I could have had a $50,000 tax credit to start my small business if the other side won, but no, now I have to pay so much more and it just doesn't work for me as a very small start-up. The tariffs have killed my business before it even really started.
dendrite9 1y ago
I've heard about businesses that had to jump into a fundraising mode to prepare for the tariffs just so they could receive product. There's also the problem in less direct sales where businesses in the chain expect a certain margin. Simply passing on the tariffs quickly leads to large price increases to the customers. I've looked at a few ways to pass on the tariff and none are very appealing, likely the healthiest option is to try to spreading the effect out by reducing margins at various stages. I feel lucky that the tariffs were announced at a a time where we were preparing to order new inventory. Otherwise the cash flow effects would be ruinous. Unfortunately we primarily export and there is a real chance we move our manufacturing out of the US as a result of this mess.
- Suppafly 1y ago
  > There's also the problem in less direct sales where businesses in the chain expect a certain margin. Simply passing on the tariffs quickly leads to large price increases to the customers. This is what a lot of people aren't understanding. If the tariff is added by the first middleman, each additional middleman between that first one and the customer is adding their increase to that existing increase and the base price, not just the original base price.
tfandango 1y ago
Yea, it's really the opposite of the stated desired effect, small businesses will go under or not even start, while Target and Walmart afforded to pre-stock their warehouses to ride the wave as best they can. Amazon already informed suppliers they "won't be accepting price increases". So we will all just be working for the big box stores and nobody will be living the American Dream of starting their own company. And, since this is all really just chaos without a plan, what happens when replacement suppliers don't spring up all over the USA?
- rsynnott 1y ago
  You kind of saw this with Brexit as well; it was marketed by its proponents as somehow helping small businesses, but of course in the end it hurt or killed them; its impacts on the likes of Amazon, while not nothing, were more muted. (Brexit, mind you, was on most dimensions not as a severe as the Trump tariffs; it's really going to be very ugly a few months down the line if they're maintained.)
mindcrash 1y ago
If you think tariffs only affect small manufacturers, just wait until the accumulated machine spares and parts stock of the local major ones run out. I can tell you, up close and personal, that the COVID era already was pretty f.cking nasty for all manufacturers with costs booming thanks to supply chain issues. Trumps tariffs bullshit is the COVID era on steroids. Seriously. Just wait and see.
rsynnott 1y ago
> Any small company that relies on profits from the last batch to fund the next batch will certainly just be killed or need to acquire debt to fund purchasing of parts/stock under new tariffs. That's pretty much _all_ small companies, whether by actually selling the products or by borrowing or otherwise fundraising on the basis of future revenue. Few companies can just go "oh, our inputs are doubling in price, we'll just double the sticker price and everything will be fine"; few markets work like that.

by bicx 1y ago

leptons 1y ago

I was just about to launch a small business based on a circuit I designed and had manufactured in China. The business also relies on LEDs that are simply not available outside of China. I could have had a $50,000 tax credit to start my small business if the other side won, but no, now I have to pay so much more and it just doesn't work for me as a very small start-up. The tariffs have killed my business before it even really started.

dendrite9 1y ago

I've heard about businesses that had to jump into a fundraising mode to prepare for the tariffs just so they could receive product. There's also the problem in less direct sales where businesses in the chain expect a certain margin. Simply passing on the tariffs quickly leads to large price increases to the customers. I've looked at a few ways to pass on the tariff and none are very appealing, likely the healthiest option is to try to spreading the effect out by reducing margins at various stages. I feel lucky that the tariffs were announced at a a time where we were preparing to order new inventory. Otherwise the cash flow effects would be ruinous. Unfortunately we primarily export and there is a real chance we move our manufacturing out of the US as a result of this mess.

Suppafly 1y ago
> There's also the problem in less direct sales where businesses in the chain expect a certain margin. Simply passing on the tariffs quickly leads to large price increases to the customers. This is what a lot of people aren't understanding. If the tariff is added by the first middleman, each additional middleman between that first one and the customer is adding their increase to that existing increase and the base price, not just the original base price.

tfandango 1y ago

Yea, it's really the opposite of the stated desired effect, small businesses will go under or not even start, while Target and Walmart afforded to pre-stock their warehouses to ride the wave as best they can. Amazon already informed suppliers they "won't be accepting price increases". So we will all just be working for the big box stores and nobody will be living the American Dream of starting their own company. And, since this is all really just chaos without a plan, what happens when replacement suppliers don't spring up all over the USA?

rsynnott 1y ago
You kind of saw this with Brexit as well; it was marketed by its proponents as somehow helping small businesses, but of course in the end it hurt or killed them; its impacts on the likes of Amazon, while not nothing, were more muted. (Brexit, mind you, was on most dimensions not as a severe as the Trump tariffs; it's really going to be very ugly a few months down the line if they're maintained.)

mindcrash 1y ago

If you think tariffs only affect small manufacturers, just wait until the accumulated machine spares and parts stock of the local major ones run out. I can tell you, up close and personal, that the COVID era already was pretty f.cking nasty for all manufacturers with costs booming thanks to supply chain issues. Trumps tariffs bullshit is the COVID era on steroids. Seriously. Just wait and see.

rsynnott 1y ago

> Any small company that relies on profits from the last batch to fund the next batch will certainly just be killed or need to acquire debt to fund purchasing of parts/stock under new tariffs. That's pretty much _all_ small companies, whether by actually selling the products or by borrowing or otherwise fundraising on the basis of future revenue. Few companies can just go "oh, our inputs are doubling in price, we'll just double the sticker price and everything will be fine"; few markets work like that.