Wyze pays $255k of tariffs on $167k of floodlights(twitter.com) |
Wyze pays $255k of tariffs on $167k of floodlights(twitter.com) |
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.
The answer is that the time for sub par quality products is coming. Just not American made. If companies cannot import a decent quality box to sell for $139 and instead need to get a "barebones case" costing $70 and then mark it up to $139 to cover for tariffs -- that is what is going to happen. And given that lot of consumer protections like EPA, CFPB, FDA etc are being gutted - there is no going back if the box breaks down within the warranty period and you need or refund. Or worse yet, it contains lead or other harmful chemicals and it is going to be costly to remove those chemicals.
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.
This article they link to is excellent
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
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.
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.
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
They’re getting attacked in the replies.
Who needs enemies - when a country is made unhealthy (due to all the new regressive HHS directives), manufacturing anything is costly, importing is unfeasible due to tariffs, misinformation, deporting anyone without due process and on and on?
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...
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?
> 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.
The reality in high-tariff economies is simpler: more people just forge customs paperwork.
heavy surf punk guitar squeals in
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.
Would a country be able to track that??
And, y'know, eh, Trump says a lot of things.
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...
The protectionism also means American Floodlight Company no longer needs to innovate. Because they can keep producing the same lights over and over again. What are people going to do? Look for innovative floodlights overseas and pay huge tariffs?
It also means American Floodlight Company products cannot be exported. It is costlier and not innovative. Japanese, Chinese, Koreans brands are going to leave them behind.
In the meantime, American Floodlight Company is a business, not a charity. They will find loopholes like get cheap parts -- this will be easier as world moves on to newer, more efficient lights, so that overall input costs are low - despite the tariffs. Then assemble it in US and claim it to be "Made in USA".
Win, Win for the company while the consumers can take a hike.
Tariffs need to be stable and updated with several months of advance notice - otherwise they don't serve their purpose.
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!
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!
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.
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.
What the actual motivation is, you'd have to ask Trump in a setting where he'd tell you the truth rather than putting on a show for the public.
There are unfair trade practices other countries have imposed against the united states, and raising tariffs starts negotiations.
That said, don't know how unfair other countries were per-country, and how negotiating has benefited from the tariffs.
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.
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.
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.
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.
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
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.
USA has neither, apart from maybe slave labour pool they have collected. So they would also need to compete in global markets with those countries also trying to climb up.
Yes, less chaos and more predictability would be better obviously but the theoretical foundation is somewhat solid.
Which also simply cannot happen because even if the US don't want stuff manufactured in "China", the rest of the world does. So the US, with higher local costs, cannot reclaim the economy of scale that went into the current chinese supply chain. Seems to me, at best the US can split it: a high cost chain in the US, a low cost chain in the rest of the world. What the US MIGHT achieve (on a long time frame) is move most of the chinese part to other low cost countries. That was already well under way.
The US also don't have the available population to run these factories.
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)
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.
Obama had the right idea, Trump if he understood it (lol) would have used it to screw China instead of giving China a free pass by withdrawing from it.
Note that China <-> US relations soured under Obama, well before Trump came into the picture and most of it was a direct result of TPP and policies like it designed to contain China economically.
Board fab though, not so much. I don't think we have a PCB fab left in the area after losing Prototron. I'd be more sad about that, except that I don't think I ever had a single order with Prototron that actually went smoothly and came back correctly.
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".
This is ignoring two things. First, for the earlier components in the supply chain, it isn't a reduction from 145% to 135%. It's a reduction to 0%, because the inputs are fungible commodity raw materials made in dozens of different countries, so moving the factory removes the entire tariff for the company selling that input to some other company. Which is what the manufacturer (i.e. the component seller) cares about, and they're the one who would be moving the factory.
And second, the later stages of the supply chain tend to contribute the most value. Suppose you haven't moved the factory that makes the capacitors, but you move the factory that makes the phones. The phone costs $500 retail, how much of the contribution was the wholesale price of the capacitors? A dollar? 145% of <1% is tiny.
So you both have a large incentive to move the early stages, because the tariff you avoid is on ~100% of the selling price from the perspective of the company making it, and a large incentive to move the later stages, because the later stages are the largest share of the final price.
> "Just move two hundred factories on a different continent" might as well be "just invent a time machine".
Why is moving 200 factories harder than moving one factory, when there are also 200 companies and they each only have to move one factory?
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.
I've heard from various YouTube channels covering news about China, it's social issues and shenanigans that all companies above a certain size are required to have someone on staff that's essentially part of the government. These channels are however mostly run by people speaking very good English, so clearly made for the western market.
But Googling that information seems to confirm it, too. I.e.
> Since 2018, domestically-listed companies are required to establish a party entity.
I cannot speak with confidence on the topic, but from an uninformed spectators perspective, it does sound like timewizards argument was correct?
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.
You are incorrect.
> Apple Inc has assembled $14 billion worth of iPhones in India in fiscal 2024, Bloomberg News reported on Wednesday.
But I meant that if you take an example of tshirt production that gets sold in the US, with fabric that comes from Bangladesh, one producer in Vietnam, one in the US. The final price consists of materials, labor, shipping. Both effectively have materials and shipping tariffed and for the Vietnam company additionally the labor is tariffed.
So the only difference is the application of the tariff on the labor for the Vietnam company.
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.
Like "they" came for middle-class Americans in stable US government jobs?
If they cared about re-creating a middle class with jobs, they wouldn't have started with wantonly eliminating so many of them using a method similar to checking if the packaged spaghetti is cooked. Toss it randomly at the wall and see what sticks.
You and I both want an employed middle class. Why are you okay with "them" coming for the middle class as long as it Government jobs? These magic employment factories are not going to spring up overnight. So in the mean time why not care about the families and lives being rocked for having the audacity to get what was a stable job that could provide security for their middle class family with the added benefit for those that value their work in civil service over joining the Ferengi?
> And who will pay for these... The "rich"?
Me for one (Im not rich), I recognize what this county provides and the opportunities available. Why be against helping that which helped you? If some people dont want to that, okay, renounce citizenship, leave the country. They can be free of a government taxing the people who benefited the most from the previous generations taxes that paid for the collective government effort providing the conditions the newly wealthy, and the much wealthier now benefited from. Musk immigrated to this country because he wasn't going to have the same opportunity to turn the money he had into the fortune it is by staying in South Africa. Yet instead of using the opportunity his American created money bought him and carefully pruning the weary looking government tree so it could grow back stronger and healthier, he took a chainsaw to it. There's more money to be made at his stage of wealth with an even weaker government; that path has greater profit and simultaneously, the chance to pull up the ladder he climbed on the backs of the middle class. So should the "rich" pay their dues? Yes, just as I do and for the same reason. Otherwise, it's the "rich" who are the freeloaders.
Is that your vision for middle class jobs? Wait til the "rich" buys whats left of the country's economy at discount, then graciously allow the masses to work in their floodlight factory for scraps 6 days a week in a new private owned unregulated job economy with no oversight for worker protections?
Floodlight making would be a huge step up for Americans leaving small towns for terrible jobs in big cities.
Check the problem with drug addiction in small and medium cities.
These tariffs are probably the worst way to try to do that. America had its best “middle class” when companies and CEOs were heavily taxed and when unions were thriving. The politicians ranting about “bringing jobs back to America” are the same ones that dismantled the things that actually _made America great_, and if they actually cared about the quality of living for most Americans they would do actual work to get there instead of alienating our economy to benefit themselves and their rich friends.