Similarly HYTE, mostly known for their PC cases, gives a remarkably detailed insight, both into their cost structure and how they are impacted by tariffs, in this video:
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 more I read opinions like these, the more it becomes clear to me that people have no clue how markets or consumerism works. Questions are never considered. Like:
Where are the raw materials for those local trailers and park benches coming from?
What is the impact if some of the raw material used for local trailers and park benches are diverted towards making $139 low quality computer cases?
Most importantly that even though "someone in America can sell the customer a box of some sort for $139", is there a market where people want to buy these low quality boxes?
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.
Because computer cases necessarily have a bunch of moderate-precision spacing for mounting hardware that are almost always stamped directly into the aluminum chassis. If the mounting isn't right, it ceases to be useful as a computer case.
Only works for low-tech stuff. You simply can't make a mainboard out of plywood. And why exactly would you want low-tech manufacturing jobs producing crappy knock-off products in the US? This really does not look like a good strategy.
This. I can't understand why people don't see it. Of course we can't rebuild what China does overnight. But we can create new supply chains at a lower quality point and then climb back to our original level. I've seen it happening all over the world.
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.
Building up from lower quality to higher quality works when you have cheap labour force due to cheap cost of living and lower regulation so you can take at least some liberties.
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.
This is a fantastically detailed video. Thank you for sharing this! Everybody on HN should watch this video to get an inside view of what businesses are going through in America right now.
https://www.youtube.com/watch?v=1W_mSOS1Qts&t=1394s
They also address the question of moving their production to the US.