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I know one US business that used to make niche electronic product. Most components they used were from China. Got hit by the tariffs that wiped all the operatin

I know one US business that used to make niche electronic product. Most components they used were from China. Got hit by the tariffs that wiped all the operating profit. Guy also had to sell his home and is now couchsurfing. Business is unlikely going to recover. Of course he considered making chips and other components in the US, but he was few billions short to start the fab.

epistasis 1y ago
Good thing that the US cancelled collection of unemployment stats just as all these sorts of negative business effects were happening. If a job is lost in the forest and no one is there to hear it, does it make a sound?
Gibbon1 1y ago
Reminds me of a comment I think by Nancy Teeters the first female Federal Reserve board member. She said the other board members thought they could savage the US manufacturing industry to kill wage inflation and break the unions and it would come right back once they stopped. And it didn't.
- seg_lol 1y ago
  Sociopaths. It breaks me to see the Fed use interest rates to cause unemployment as the lever against inflation. It all seems so cruel.
  - zahlman 1y ago
    They use interest rates to protect against inflationary (and deflationary) spirals, which are known to be devastating. The effect on the unemployment rate is a known, and predictable, side effect. But formal unemployment is small compared to labour force dropout anyway, and the latter is not necessarily so sensitive to economic conditions anyway. Besides which, the unemployment rate can't really keep going down forever. Zoom out; recent levels are actually quite impressive in the USA. Yes, they've climbed since 2023, but they're only just reaching the pre-GFC minimum (https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm https://www.bls.gov/charts/employment-situation/civilian-une...). Zoom out further: https://fred.stlouisfed.org/series/UNRATE/ https://fred.stlouisfed.org/series/UNRATE/ Had it not been for COVID you'd be at more than 16 years without a(n NBER-determined) recession, long enough to suggest a fundamental shift vs. how things worked in the several decades before that.
    - clcaev 1y ago
      Yet the average household seems weaker now than 16 years ago. Perhaps policy guided by this metric could use rethinking.
      - dragonwriter 1y ago
        Your observation is about distributional characteristics of the economy which, in terms of policy, are addressed by fiscal policy and not monetary policy; the former remains in the hands of Congress and the President without delegation to the Federal Reserve, which has been given only a narrow set of tools adapted to and a mission related to broad aggregate performance.
      - ls612 1y ago
        The median household income is higher today in real terms than it was in 2008.
  - ericd 1y ago
    Have you ever read about people burning piles of German currency because it was better than using it to buy firewood with? Not to say we would get there, but allowing inflation to run is not kinder.
    - inferiorhuman 1y ago
      I think these days folks typically use Zimbabwe or Argentina as examples.
      - brobdingnagians 1y ago
        Those are more recent examples, but I think Germany is still a more visceral example for a lot of Western nations because Germany was a high tech, educated industrial nation that was hit with such massive problems from government policy. It's closer to home. Other countries are (wrongfully) easier to dismiss as being just too different from our wealthy and enlightened selves.
        ericd 1y ago
        Also, Germany was a great power seriously challenging the greatest power of the time, the British Empire. They fell a lot further than those other examples.
        Gibbon1 1y ago
        People get confused the hyper inflation in Germany was right after the end of WWI when Germany's economy was collapsing. Turns out you can't fix that with monetary policy. A point. Economists like people to believe that hyper inflation lead to Hitler. When it was austerity policies at the start of the great depression 10 years later that lead to the Nazi's winning in 33. Same austerity policies in the US lead to FDR and the Democrats winning.
        inferiorhuman 1y ago
        Unfortunately we're looking more like Hogan's Heroes than Germany. Both Zimbabwe and Argentina (and, quite frankly, Venezuela) were well developed before they went down the road of disastrous policies.
  - rcxdude 1y ago
    Unemployement is a necessary part of the economy, what is cruel is making unemployment unlivable.
- inopinatus 1y ago
  From the other side of the Atlantic this sounds like straight Thatcherism, in which Chicago-school monetarism was an ideological anti-union weapon, and the Thatcher cabinet was not coy about it. However I think the US went that way first even if Reaganomics came later.
  - scrps 1y ago
    I think a lot of that in the US got spun up with Nixon, Reagan brought a lot of it to the mainstream though. Both of them hated unions with a passion that is for sure.
    - johnebgd 1y ago
      Unions are the best of all the bad solutions we’ve come up with so far for labor to compete with capital. The worst of course is collectivism through government, though that’s being tried again…
      - AnthonyMouse 1y ago
        The best solution is antitrust enforcement and removal of anti-competitive laws/rules lobbied for by incumbents. When companies have to compete with each other for labor and customers, wages go up and prices go down. Whey they consolidate they can charge monopoly rents. Unions often even make this worse because they'll latch on to a monopolistic employer and then lobby with them to retain the monopoly at the expense of all the workers who are their customers rather than their employees.
        varispeed 1y ago
        > removal of anti-competitive laws/rules lobbied for by incumbents. If even if there are such ideas in new government, they quickly disappear over wine and steak dinners with the lobbyists. Unfortunately this is not seen as bypass of democratic process. Nobody voted for having less rights and any bargaining power stripped and yet here we are. That's where security services should come in (in many countries protection of democracy is their main statutory duty) - but they are not doing their job tax payers pay them to do.
- trashface 1y ago
  FWIW Teeters was apparently one of the more dovish from that era and didn't think the high rates were a great idea: “You are pulling the financial fabric of this country so tight that it’s going to rip...once you tear a piece of fabric, it’s very difficult, almost impossible, to put it back together again.” An analogy which she also said none of the men understood because they had never sewn anything
calvinmorrison 1y ago
a purported niche/low-volume electronics, but the profit is somehow dependent on BOM price? a tariff bump on a small BOM doesn’t take you from profitable to homeless. if that happened, the business already had seriously bad margins, bad cash flow, over-leverage, or maybe he was just doing it out of love getting paid maybe back for his time or not. tariffs might’ve hurt, but they don’t collapse a healthy niche hardware company where buyers are presumably also into the niche. seems weird i dont get it. can you explain further?
- herdymerzbow 1y ago
  gamers nexus did a great (and very long) video on the impact of tariffs on US computer businesses. Some of the manufacturers went into quite a bit of detail breaking down their costs and how tariffs would render some products so unprofitable that they would cease to serve the US market. Not sure if it necessarily applies to a niche/low volume business, but the impacts on a larger business were eye opening: https://www.youtube.com/watch?v=1W_mSOS1Qts https://www.youtube.com/watch?v=1W_mSOS1Qts tariffs have chopped and changed so much since this video that the specific tariff amounts mentioned are likely not accurate.
- esalman 1y ago
  Do you run a business with good margin, good cash flow, optimally leveraged and for profit? If yes, please tell us more about how tariffs have helped you.
  - WalterBright 1y ago
    If you've been making the products locally, the tariffs on foreign products help you.
    - SturgeonsLaw 1y ago
      Depends on your supply chain's exposure to foreign markets
    - scheme271 1y ago
AniseAbyss 1y ago
I am imagining Mexican cartels smuggling hardware into the US... (But seriously I do not know how good US Customs is but in my country every day millions of packages from Asia arrive and they are checking not even a percent).
- inferiorhuman 1y ago
  Well they're less perishable than avocados.
- iancmceachern 1y ago
  This kind of happens. There are all sorts of cases of counterfit ICs. Some even making it into military hardware
  - wildzzz 1y ago
    Counterfeits don't happen when you buy parts from reputable distributors (digikey, mouser, Newark, TTI, arrow, etc) that are not "marketplace" items. These parts often come right from the manufacturer or from a domestic distributor for the manufacturer. You get counterfeits when you buy from brokers. Often with older electronics designs, the parts the engineers originally picked are no longer made. It's not the end of the world, there are solutions. Sometimes the vendor changes the part number due to a process change or the part design is sold to another company and goes under a new number. You can also sometimes find drop in compatible parts (common for the 7400/5400 series chips), these may be in a different package so you might have to design an interposer or deadbug it. The worst option is finding old stock using a broker. There are legit brokers that will source old stock and "refurbish" them for you (called re-lifeing). But there are also shady brokers that will buy counterfeits (or get tricked into buying them) that may or may not actually work. Sometimes the counterfeits are relabeled parts that are compatible but the new label gets a higher price because they aren't being made any more. Sometimes the counterfeit is actually a totally different design that is shoehorned into its desired purpose (like a new microcontroller masquerading as an old processor or ASIC). Other times it's just some random junk pulled from e-waste that's been relabelled. Other times you'll get a counterfeit that comes from a stolen design. Even when the counterfeit functions, it may not perform to the same spec as the original part (very important for military spec parts) or will have other characteristics that make it incompatible with the rest of the design (like drawing too much or too little current). When it comes to engineering in ISO9001, traceability is a huge thing and brokers just can't provide that. At my job, we have an "absolutely no brokers" rule. They simply cannot guarantee that what they provide is genuine. If a legitimate distributor doesn't have stock of a discontinued part, they'll never have stock of it. Brokers will tell you what you want to hear while they go out and try to make it happen. I'm not saying all brokers are shady but if you are considering buying from a broker, you should be instead considering how you can replace that part.
JKCalhoun 1y ago
I stopped buying vintage cameras from Japan on eBay. Well, there's always the next administration…
- esalman 1y ago
  I'm sure JD Vance administration will be more vintage-camera-friendly.
  - mindslight 1y ago
    [flagged]
  - inferiorhuman 1y ago
    Nah, I'm sure he's more focused on vintage furniture.
    - CursedSilicon 1y ago
      Likes the creak of some old wood
      - a2tech 1y ago
        With the amount of time he spends with Trump and Peter Thiel..probably
  - inferiorhuman 1y ago
    Nah I'm sure the veep's administration is far more focused on couches than cameras.
throw09803290 1y ago
[flagged]
- hakfoo 1y ago
  Why exactly is China an enemy? They want to increase their standard of living and expand their sphere of influence. That doesn't have to hurt the US directly. What it may undermine is the idea that the US gets to unilaterally steer the developed world. On the other hand, perhaps that's a burden the US should be excited about tossing off. It's expensive to be the World Police, and it's left them with a lot of strained reputation and burnt-through leverage. It also requires them to do a lot of "lead by example" stuff that they seem completely disinterested in (industrial policy, forming consensus, trying to present as a magnanimous moral model).
  - jalapenos 1y ago
    Your sarcasm detector failed
  - cultofmetatron 1y ago
    china is an enemy because they have a parallel financial institution that isn't controlled by the people who control the european/american financial hegemony and have enough military to stand up to te US uf war broke out.

epistasis 1y ago

Good thing that the US cancelled collection of unemployment stats just as all these sorts of negative business effects were happening. If a job is lost in the forest and no one is there to hear it, does it make a sound?

Gibbon1 1y ago

Reminds me of a comment I think by Nancy Teeters the first female Federal Reserve board member. She said the other board members thought they could savage the US manufacturing industry to kill wage inflation and break the unions and it would come right back once they stopped. And it didn't.

seg_lol 1y ago
Sociopaths. It breaks me to see the Fed use interest rates to cause unemployment as the lever against inflation. It all seems so cruel.
- zahlman 1y ago
  They use interest rates to protect against inflationary (and deflationary) spirals, which are known to be devastating. The effect on the unemployment rate is a known, and predictable, side effect. But formal unemployment is small compared to labour force dropout anyway, and the latter is not necessarily so sensitive to economic conditions anyway. Besides which, the unemployment rate can't really keep going down forever. Zoom out; recent levels are actually quite impressive in the USA. Yes, they've climbed since 2023, but they're only just reaching the pre-GFC minimum (https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm https://www.bls.gov/charts/employment-situation/civilian-une...). Zoom out further: https://fred.stlouisfed.org/series/UNRATE/ https://fred.stlouisfed.org/series/UNRATE/ Had it not been for COVID you'd be at more than 16 years without a(n NBER-determined) recession, long enough to suggest a fundamental shift vs. how things worked in the several decades before that.
  - clcaev 1y ago
    Yet the average household seems weaker now than 16 years ago. Perhaps policy guided by this metric could use rethinking.
    - dragonwriter 1y ago
      Your observation is about distributional characteristics of the economy which, in terms of policy, are addressed by fiscal policy and not monetary policy; the former remains in the hands of Congress and the President without delegation to the Federal Reserve, which has been given only a narrow set of tools adapted to and a mission related to broad aggregate performance.
    - ls612 1y ago
      The median household income is higher today in real terms than it was in 2008.
- ericd 1y ago
  Have you ever read about people burning piles of German currency because it was better than using it to buy firewood with? Not to say we would get there, but allowing inflation to run is not kinder.
  - inferiorhuman 1y ago
    I think these days folks typically use Zimbabwe or Argentina as examples.
    - brobdingnagians 1y ago
      Those are more recent examples, but I think Germany is still a more visceral example for a lot of Western nations because Germany was a high tech, educated industrial nation that was hit with such massive problems from government policy. It's closer to home. Other countries are (wrongfully) easier to dismiss as being just too different from our wealthy and enlightened selves.
      - ericd 1y ago
        Also, Germany was a great power seriously challenging the greatest power of the time, the British Empire. They fell a lot further than those other examples.
      - Gibbon1 1y ago
        People get confused the hyper inflation in Germany was right after the end of WWI when Germany's economy was collapsing. Turns out you can't fix that with monetary policy. A point. Economists like people to believe that hyper inflation lead to Hitler. When it was austerity policies at the start of the great depression 10 years later that lead to the Nazi's winning in 33. Same austerity policies in the US lead to FDR and the Democrats winning.
      - inferiorhuman 1y ago
        Unfortunately we're looking more like Hogan's Heroes than Germany. Both Zimbabwe and Argentina (and, quite frankly, Venezuela) were well developed before they went down the road of disastrous policies.
- rcxdude 1y ago
  Unemployement is a necessary part of the economy, what is cruel is making unemployment unlivable.
inopinatus 1y ago
From the other side of the Atlantic this sounds like straight Thatcherism, in which Chicago-school monetarism was an ideological anti-union weapon, and the Thatcher cabinet was not coy about it. However I think the US went that way first even if Reaganomics came later.
- scrps 1y ago
  I think a lot of that in the US got spun up with Nixon, Reagan brought a lot of it to the mainstream though. Both of them hated unions with a passion that is for sure.
  - johnebgd 1y ago
    Unions are the best of all the bad solutions we’ve come up with so far for labor to compete with capital. The worst of course is collectivism through government, though that’s being tried again…
    - AnthonyMouse 1y ago
      The best solution is antitrust enforcement and removal of anti-competitive laws/rules lobbied for by incumbents. When companies have to compete with each other for labor and customers, wages go up and prices go down. Whey they consolidate they can charge monopoly rents. Unions often even make this worse because they'll latch on to a monopolistic employer and then lobby with them to retain the monopoly at the expense of all the workers who are their customers rather than their employees.
      - varispeed 1y ago
        > removal of anti-competitive laws/rules lobbied for by incumbents. If even if there are such ideas in new government, they quickly disappear over wine and steak dinners with the lobbyists. Unfortunately this is not seen as bypass of democratic process. Nobody voted for having less rights and any bargaining power stripped and yet here we are. That's where security services should come in (in many countries protection of democracy is their main statutory duty) - but they are not doing their job tax payers pay them to do.
trashface 1y ago
FWIW Teeters was apparently one of the more dovish from that era and didn't think the high rates were a great idea: “You are pulling the financial fabric of this country so tight that it’s going to rip...once you tear a piece of fabric, it’s very difficult, almost impossible, to put it back together again.” An analogy which she also said none of the men understood because they had never sewn anything

calvinmorrison 1y ago

a purported niche/low-volume electronics, but the profit is somehow dependent on BOM price? a tariff bump on a small BOM doesn’t take you from profitable to homeless. if that happened, the business already had seriously bad margins, bad cash flow, over-leverage, or maybe he was just doing it out of love getting paid maybe back for his time or not. tariffs might’ve hurt, but they don’t collapse a healthy niche hardware company where buyers are presumably also into the niche. seems weird i dont get it. can you explain further?

herdymerzbow 1y ago
gamers nexus did a great (and very long) video on the impact of tariffs on US computer businesses. Some of the manufacturers went into quite a bit of detail breaking down their costs and how tariffs would render some products so unprofitable that they would cease to serve the US market. Not sure if it necessarily applies to a niche/low volume business, but the impacts on a larger business were eye opening: https://www.youtube.com/watch?v=1W_mSOS1Qts https://www.youtube.com/watch?v=1W_mSOS1Qts tariffs have chopped and changed so much since this video that the specific tariff amounts mentioned are likely not accurate.
esalman 1y ago
Do you run a business with good margin, good cash flow, optimally leveraged and for profit? If yes, please tell us more about how tariffs have helped you.
- WalterBright 1y ago
  If you've been making the products locally, the tariffs on foreign products help you.
  - SturgeonsLaw 1y ago
    Depends on your supply chain's exposure to foreign markets
  - scheme271 1y ago

AniseAbyss 1y ago

I am imagining Mexican cartels smuggling hardware into the US... (But seriously I do not know how good US Customs is but in my country every day millions of packages from Asia arrive and they are checking not even a percent).

inferiorhuman 1y ago
Well they're less perishable than avocados.
iancmceachern 1y ago
This kind of happens. There are all sorts of cases of counterfit ICs. Some even making it into military hardware
- wildzzz 1y ago
  Counterfeits don't happen when you buy parts from reputable distributors (digikey, mouser, Newark, TTI, arrow, etc) that are not "marketplace" items. These parts often come right from the manufacturer or from a domestic distributor for the manufacturer. You get counterfeits when you buy from brokers. Often with older electronics designs, the parts the engineers originally picked are no longer made. It's not the end of the world, there are solutions. Sometimes the vendor changes the part number due to a process change or the part design is sold to another company and goes under a new number. You can also sometimes find drop in compatible parts (common for the 7400/5400 series chips), these may be in a different package so you might have to design an interposer or deadbug it. The worst option is finding old stock using a broker. There are legit brokers that will source old stock and "refurbish" them for you (called re-lifeing). But there are also shady brokers that will buy counterfeits (or get tricked into buying them) that may or may not actually work. Sometimes the counterfeits are relabeled parts that are compatible but the new label gets a higher price because they aren't being made any more. Sometimes the counterfeit is actually a totally different design that is shoehorned into its desired purpose (like a new microcontroller masquerading as an old processor or ASIC). Other times it's just some random junk pulled from e-waste that's been relabelled. Other times you'll get a counterfeit that comes from a stolen design. Even when the counterfeit functions, it may not perform to the same spec as the original part (very important for military spec parts) or will have other characteristics that make it incompatible with the rest of the design (like drawing too much or too little current). When it comes to engineering in ISO9001, traceability is a huge thing and brokers just can't provide that. At my job, we have an "absolutely no brokers" rule. They simply cannot guarantee that what they provide is genuine. If a legitimate distributor doesn't have stock of a discontinued part, they'll never have stock of it. Brokers will tell you what you want to hear while they go out and try to make it happen. I'm not saying all brokers are shady but if you are considering buying from a broker, you should be instead considering how you can replace that part.

JKCalhoun 1y ago

I stopped buying vintage cameras from Japan on eBay. Well, there's always the next administration…

esalman 1y ago
I'm sure JD Vance administration will be more vintage-camera-friendly.
- mindslight 1y ago
  [flagged]
- inferiorhuman 1y ago
  Nah, I'm sure he's more focused on vintage furniture.
  - CursedSilicon 1y ago
    Likes the creak of some old wood
    - a2tech 1y ago
      With the amount of time he spends with Trump and Peter Thiel..probably
- inferiorhuman 1y ago
  Nah I'm sure the veep's administration is far more focused on couches than cameras.

throw09803290 1y ago

[flagged]

hakfoo 1y ago
Why exactly is China an enemy? They want to increase their standard of living and expand their sphere of influence. That doesn't have to hurt the US directly. What it may undermine is the idea that the US gets to unilaterally steer the developed world. On the other hand, perhaps that's a burden the US should be excited about tossing off. It's expensive to be the World Police, and it's left them with a lot of strained reputation and burnt-through leverage. It also requires them to do a lot of "lead by example" stuff that they seem completely disinterested in (industrial policy, forming consensus, trying to present as a magnanimous moral model).
- jalapenos 1y ago
  Your sarcasm detector failed
- cultofmetatron 1y ago
  china is an enemy because they have a parallel financial institution that isn't controlled by the people who control the european/american financial hegemony and have enough military to stand up to te US uf war broke out.