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January 13, 2011
News - Open Discussion: Puttin' …
about 2 months ago
What kind of monster uses a combination of a red thing, a yellow thing, and a green thing, THEN DOSN'T PUT THEM IN ORDER?!!? AAARRRGGGGGGGGG!!!!!!!!
News - Distance Sensing: How Far…
about 8 months ago
Glad you aren't completely gone, Shawn!
News - Summer of Tariffs
about 11 months ago
I forgot to mention in my previous comments that with the example you posted there are incorrect numbers in the Tariff Code (HTSUS Subheading) column.
No need to worry about hobbyists. These tariffs only effect imports on individual components and on large shipments (usually over $800). Since places like SparkFun already have a 20x to 100x markup on these small components, hopefully they can eat the .25x increase on these parts. Again:
Small components from China to large customers = TARIFF
Small components from Taiwan, Malaysia, India, etc etc to large customers = no tariff
Small components from anywhere to small customers = no tariff
Completed boards to customers large and small = no tariff
I just told you about my business where I am in the drivers seat and supplied actual numbers backed by research. If this is just another online space to yell into the wind, by all means, carry on.
I can't tell if this is a response to me or not. I do own a side business that is directly impacted by these tariffs and it has also been a very big impact at my day job. Luckily my side business is more for fun than making a lot of extra money so I'm just absorbing the costs for now, and my day job's final product's cost has a lot off labor and mechanical components in it. Again, my core complaint with articles like this and ones from other companies like MOOG is that they are acting like their product is going to instantly cost 25% more. I've illustrated that AT WORST a product on SparkFun.com is going to cost 2.5% more. Since posting that I've gone back and looked at the top 10 product in many of their categories and the vast majority of them have 0 tariff impacted parts (assuming they get the completed boards from a non-US source as their example indicates). They could do a blind 1% increase on MSRP and more than cover these tariffs, but instead they are doing a multi-part series in blog posts complaining about them.
Donald Trump let it be known that he was targeting tariffs on Chinese exports long before he was even the GDP nominee. I know SparkFun is a young company, but this should have been a massive red flag to you (it was to us an all the other companies my friends work for). It is not a secret that electronics have been kept at an artificial low price on both sides of the US/China trade relationship, and gravy trains do not run forever.
Again, these tariffs apply to raw materials, not (most) completed products, not labor, not shipping, or exchange rates. Raw materials from China seem to be a small portion of what you sell, as evident by the example you chose. Just to recap, that was a 2% cost increase using the best numbers I could quickly find, it is likely closer to 1%.
If raw materials increased on home building by 25%, yes that would be a huge hit. Homes are typically 50% materials 50% labor, so finished homes would increase in cost 12.5% overnight. SparkFun's product seems at worse 10% tariff-able materials and 90% other, so at worse product price should increase should be 2.5%.
SparkFun's position on this is sounding more like positioning for future layoffs, offshore outsourcing, bad profit announcement, product removal, or something else.
Costs change all the time though, it isn't like this is some sort of new work.
Raw materials like oil, copper, all fluctuate (sometimes wildly) and even more constant materials like silicon and aluminum and always on the move.
Exchange rates and financial processing fees can double or half overnight, and they are never the same day to day.
Subsidies come and goo and need to be accounted for.
Business agreements expire and need to be renegotiated.
And yes, tariffs can be implemented and tariffs can be lifted.
This is all part of doing business, and acting like one change that you weren't necessarily planning on (you should have been) is going to cost your company "hundreds of thousands of dollars" either means you don't understand the change, or you aren't as 'small' of a business as you let on.
Thank you for your input and employing so many people in your community.
Just because I'm curious, I took your example of the Essential Sensor Kit and sourced the 5 tariff affected components on AliExpress. I have no idea what sort of agreements you have with your suppliers, what quantities you order, or how you assign CoDB (costs of doing business) to your parts, but you shouldn't be paying more than what I can get 20-50 of them shipped from China. SparkFun charges $12.75 for these components separately, and the whole kit (with non affected items) runs $39.95. I could order the same items for $3.47 from China, so after an additional 25% tariff, those components would be $4.34, so my estimation of the increase of your cost of the $39.95 kit would be $0.87. Hardly earth shattering.
If you try to simplify something as complicated as the worlds largest economy and every agreement it has with even a single other country, you are going to have a bad time. Also, if you assume your obligations, ethics, morals, or patriotism is reflective of the majority of other Americans, well, you know what happens when you assume...
I'm not going to act like I know everything about international trade, agreements, and tariffs, but I do know how it has impacted my business (control boards). We tried to go to China for some manufacturing, and unlike the previous companies I worked for, we accounted for all the 'soft' costs. Sending engineers over there constantly, additional testing, higher warranty, establishing a ground presence to keep an eye on manufacturing, stolen IP, etc almost completely killed any savings we saw. So, except for the actual Asia specific product, we resisted the Chinese Siren Song and kept production domestic. I can guarantee that if we still had that original line in China today, that after these tariffs we would have brought it back. This would have created an immediate need for roughly 40 workers in our local community and an unknown number more to support, house, and feed the workers.
The delta between domestic and China production of a lot of things isn't as big as a lot of people think. The control board in my personal example was $27 in China and $32 domestic. $5 can be a lot, but again considering the soft costs, the fact that it goes into a product with over $100 of mechanical bits, and the end product retails for $300, the $5 wasn't worth it. Direct customer feedback also has told us that American Made is a very very strong selling point to them.
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