Forced to raise prices - tariff

[Uncle Dave]

I've had over 30 letter from suppliers raising prices and can't eat it anymore.

We've absorbed tariff so far but have to pass this latest part to clients.

We try to buy US but the Gov has pushed all the component companies out of the country and China is the only supplier for many parts.

Now my APAC and EMEA competition has an even lower price - squeezing me even harder.

Not sure who is pro or con tariff, but figured it'd be interesting to share some of its real world implications with the group.

UD

 

[94Nautique]

I've had over 30 letter from suppliers raising prices and can't eat it anymore.

We've absorbed tariff so far but have to pass this latest part to clients.

We try to buy US but the Gov has pushed all the component companies out of the country and China is the only supplier for many parts.

Now my APAC and EMEA competition has an even lower price - squeezing me even harder.

Not sure who is pro or con tariff, but figured it'd be interesting to share some of its real world implications with the group.

UD

and this begs the question: when the tariffs go away, will those 30 suppliers instantly go back to the previous price? Taking it one step further, would you? And how long till it goes back. I have no answer, just thinking out loud about long term econ stuff. It could end up better for you in the long run, or worse.

 

[Sandlord]

we should never be reliant on another country as our sole source of any product that we need.
Make America Great Again.

 

[RodnJen]

That’s bad news but I don’t see anyway around it. This is the play that has been made, now we’ll see how it unfolds.

 

[RCDave]

Tariffs only benefit the governments imposing them against each other. The citizens are the ones that suffer the consequences.

 

[JBS]

Tariffs only benefit the governments imposing them against each other. The citizens are the ones that suffer the consequences.

Liar

 

[Bpracing1127]

In my industry we are being indirectly effected by tariffs. We most buy stainless, aluminum, inconel, and titanium. While we have to buy domestic due to our military contracts for the F35, F22, and other military aircraft and spacecraft the tariffs are effecting us as the American mills are at capacity and therefore leadtime and price goes up for us.

We are seeing leadtimes of 80 weeks now and 200% price increases. As materials manager I have to combat these issues.

 

[regor]

Buckle up bitches, it’s about more than your wallets.

 

[Racey]

I've had over 30 letter from suppliers raising prices and can't eat it anymore.

We've absorbed tariff so far but have to pass this latest part to clients.

We try to buy US but the Gov has pushed all the component companies out of the country and China is the only supplier for many parts.

Now my APAC and EMEA competition has an even lower price - squeezing me even harder.

Not sure who is pro or con tariff, but figured it'd be interesting to share some of its real world implications with the group.

UD

This is the crux of the problem, Government/Politicians in the US imposed heavy regulation and compliance costs onto our mfgs, many of these politicians also invested into Chinese companies, or US companies moving to China at the same time, companies move to China and with it take their trade secrets and mfg techniques which the Chinese now have, Chinese devalue their currency undercutting the American hold outs, and run them all out of biz.

This is something that was done over the course of 20 years, it won't be reversed overnight, but if we continue down the same road as the last 20 years it will get much worse... To rectify it there must be a starting point....Trump has been rolling back regs pretty steadily, (if you listen to NPR you'd believe that he has burned them all to the ground and let companies run amok )

What is the solution?

 

[Uncle Dave]

This is the crux of the problem, Government/Politicians in the US imposed heavy regulation and compliance costs onto our mfgs, many of these politicians also invested into Chinese companies, or US companies moving to China at the same time, companies move to China and with it take their trade secrets and mfg techniques which the Chinese now have, Chinese devalue their currency undercutting the American hold outs, and run them all out of biz.

This is something that was done over the course of 20 years, it won't be reversed overnight, but if we continue down the same road as the last 20 years it will get much worse... To rectify it there must be a starting point....Trump has been rolling back regs pretty steadily, (if you listen to NPR you'd believe that he has burned them all to the ground and let companies run amok )

What is the solution?

To my mind the solution was to incent bringing back these industries - there has been some movement
- but NATFA/ USMCA didn't change anyone's mind about investing in Mexico vs the US -
Mexico is now tariifed as well I'm sure GM is thrilled about that.

when we have a manufacturing base to supply us -
when we've got some self-fulfillment capability -
start pulling the bandaid off.

With no domestic industry to supply - we are a hostage to china for many products.

EVERYONES wallet is going to feel this.

 

[Uncle Dave]

and this begs the question: when the tariffs go away, will those 30 suppliers instantly go back to the previous price? Taking it one step further, would you? And how long till it goes back. I have no answer, just thinking out loud about long term econ stuff. It could end up better for you in the long run, or worse.

Many have said they will- if they dont they won't be competitive with those who will.

Who knows how long before it goes back - or if it will?

I'm simply going to pass the cost to the consumer going forward and hope I can stay competitive on the world scene.


UD

 

[Uncle Dave]

we should never be reliant on another country as our sole source of any product that we need.
Make America Great Again.

agreed - unfortunately, we're way past that.

UD

 

[94Nautique]

Many have said they will- if they dont they won't be competitive with those who will.

Who knows how long before it goes back - or if it will?

I'm simply going to pass the cost to the consumer going forward and hope I can stay competitive on the world scene.


UD

It's about all you can do at this point

 

[Uncle Dave]

It's about all you can do at this point

Our guys on point aren't quick enough to catch what's really going on- tons of companies get around it by simply originating the sale in a non tariffed country.

Example: An Australian competitor sources everything in China and assembles in south east Asia - then ships from Australia.

They get no tariff applied to product built 100% with Chinese parts.

UD

 

[LargeOrangeFont]

Our guys on point aren't quick enough to catch what's really going on- tons of companies get around it by simply originating the sale in a non tariffed country.

Example: An Australian competitor sources everything in China and assembles in south east Asia - then ships from Australia.

They get no tariff applied to product built 100% with Chinese parts.

UD

Agreed, it is actually easy to bypass in many instances. I am already seeing it happen for IT gear.

I just got notification today from Cisco that all hardware quotes are good for 30 days from the 10th. They will then be passing the Mexican tariff on to the resellers which I will pass to my customers. Dell has no such announcement as of yet, and I heard they will simply list another country of origin by completing assembly elsewhere.

 

[wsuwrhr]

Nothing better said.

Buckle up bitches, it’s about more than your wallets.

 

[RCDave]

Our guys on point aren't quick enough to catch what's really going on- tons of companies get around it by simply originating the sale in a non tariffed country.

Example: An Australian competitor sources everything in China and assembles in south east Asia - then ships from Australia.

They get no tariff applied to product built 100% with Chinese parts.

UD

Smart entrepreneurs and a free market will always find a way around big government. There is no way to regulate everthing

 

[530RL]

Smart entrepreneurs and a free market will always find a way around big government. There is no way to regulate everthing

Which is exactly why trade wars are not "easy to win", and we will lose this trade war just as we have lost the war on drugs.

Free markets always work better than big government, even a Trump big government.

 

[Uncle Dave]

Smart entrepreneurs and a free market will always find a way around big government. There is no way to regulate everthing

Smart guys usually don't give a shit about people.

I can fire all my US crew and suppliers and simply move this work to non tariffed country like say Singapore and import from there.

Rather than a plant Ill simply have a warehouse.

Thats how businesses solve this.

UD

 

[wsuwrhr]

....and what happens when Singapore starts fuckin their shit up?

Smart guys usually don't give a shit about people.

I can fire all my US crew and suppliers and simply move this work to non tariffed country like say Singapore and import from there.

Rather than a plant Ill simply have a warehouse.

Thats how businesses solve this.

UD

 

[Uncle Dave]

....and what happens when Singapore starts fuckin their shit up?

Move it again - I can sub out anything I want, or have multiple places supply.

All the electronic design IP assembly, test, and software design is in-house we can use whoever I want to build it.

We've chosen to use American workers in a small town, and local fab suppliers- one of eth few remaining " American electronics companies."

We pay a hefty premium over our competitors who have almost all bailed overseas.

Directly and indirectly, there are probably 5-600 families it feeds, pays for mortgages, sends to school, etc...

THIS keeps me up at night.

UD

 

[530RL]

Move it again - I can sub out anything I want, or have multiple places supply.

All the electronic design IP assembly, test, and software design is in-house we can use whoever I want to build it.

We've chosen to use American workers in a small town, and local fab suppliers- one of eth few remaining " American electronics companies."

We pay a hefty premium over our competitors who have almost all bailed overseas.

Directly and indirectly, there are probably 5-600 families it feeds, pays for mortgages, sends to school, etc...

THIS keeps me up at night.

UD

Or you can move it to Flex, Pegatron or a host of others whom have 100's of plants in over 50 countries and you can get the purchasing power scale from them for your BOM and manufacture in whatever plant necessary to completely avoid any tariffs or duties no matter who comes into or goes out of power and regardless of what countries you want to sell into.

They will move it overnight and/or split it into as many plants as necessary to build it cheaper, faster and better regardless of where the cost friction is coming from.

As you are aware, it is highly complicated, intertwined and connected and to think that a "trade war" is easy to win is devoid of the realities of how business really works today.

 

[regor]

Or you can move it to Flex, Pegatron or a host of others whom have 100's of plants in over 50 countries and you can get the purchasing power scale from them for your BOM and manufacture in whatever plant necessary to completely avoid any tariffs or duties no matter who comes into or goes out of power and regardless of what countries you want to sell into.

They will move it overnight and/or split it into as many plants as necessary to build it cheaper, faster and better regardless of where the cost friction is coming from.

As you are aware, it is highly complicated, intertwined and connected and to think that a "trade war" is easy to win is devoid of the realities of how business really works today.

So what's your buddy Xi upset about? It's like we are holding rice hostage when all we're trying to do is balance the tariffs.....................................liar?

 

[wsuwrhr]

For the record, because of tariffs, and VAT, placed on the US from years ago, my products are not easily palettable, or priced out of market in Australia, England, France and Germany.

 

[Uncle Dave]

My stuff is expensive in EMEA as well. Tough GEO navigate.

But it's interestingly relative to where you are standing.
I can almost always find more and always easily find less expensive product.

The Germans like it and say its basically German quality at American (lesser than their) prices.

UD

 

[regor]

This should help things for you guys.

In Major Provocation To China, US Prepares To Sell $2 Billion In Weapons To Taiwan

 

[Uncle Dave]

Thats a good start, but far from what we've sold them prior.

https://en.wikipedia.org/wiki/List_of_US_arms_sales_to_Taiwan

Headlines loaded with puffery are pretty common from zero hedge.

UD

 

[JBS]

Once Lyin Ted, Always lyin Ted. Stupid RINO does not understand Mexico pays.

Many senators are expressing opposition to the tariffs, including some who supported Trump on his border wall initiative. For example, Senator Ted Cruz said the tariffs would amount to a $30 billion tax increase on people in his home state of Texas.

 

[regor]

Thats a good start, but far from what we've sold them prior.

https://en.wikipedia.org/wiki/List_of_US_arms_sales_to_Taiwan

Headlines loaded with puffery are pretty common from zero hedge.

UD

It's all about the timing.

Once Lyin Ted, Always lyin Ted. Stupid RINO does not understand Mexico pays.

Many senators are expressing opposition to the tariffs, including some who supported Trump on his border wall initiative. For example, Senator Ted Cruz said the tariffs would amount to a $30 billion tax increase on people in his home state of Texas.

Ted.............you're wanted in the Royal Court!!!!

Lip service to his constituents.

Is that $30 billion at 5%, 10%, 15%, 20% or 25% I wonder and how much is the flood of illegals costing them?

 

[Maw]

For those of you who manufacture here and ship overseas, make sure you pass these items through an IC-Disc on the way. This is a provision in the US tax code designed to encourage exports by converting profits from ordinary income to cap gains. None of my CPAs knew about it and I only found out during a seminar at the Fort Lauderdale Boat Show. It cost me millions of dollars per year in overpaid taxes prior to stumbling onto it. We set our IC-Disc corporation up in Montana (as I remember).

 

[Uncle Dave]

For those of you who manufacture here and ship overseas, make sure you pass these items through an IC-Disc on the way. This is a provision in the US tax code designed to encourage exports by converting profits from ordinary income to cap gains. None of my CPAs knew about it and I only found out during a seminar at the Fort Lauderdale Boat Show. It cost me millions of dollars per year in overpaid taxes prior to stumbling onto it. We set our IC-Disc corporation up in Montana (as I remember).

I'll check it out - it'd be interesting if I learned a new trick the accounting team didn't on RDP.

UD