Nov 18, 2024
Tariffs and what they're doing
Everyone that isn't living under a rock is likely familiar with the current Tariff situation stemming from US President Donald Trump. Here are our thoughts on this fiasco.
1) The need for tariffs: Without a doubt, tariffs are good tools to develop local manufacturing. It's safe to say when given the chance, most people in the US would prefer to buy American made products and support their local communities. However, in 2025 does this really make sense? In other words, is it even feasible to bring back certain manufacturing to the US in specific industries? Our response would be an astounding no. Sure, certain industries can and hopefully will come back to the US, but to think that Mice and Keyboards that sell for $50 or less will one day return to the US seems a bit outrageous.
2) The concept of negotiating: Negotiation is a great tactic in business. It can be simple or drawn out. We argue that Trump's so called negotiation tactics amount to bullying and instead of helping the US, are only alienating other frends and trading partners around the globe. We would have loved for Trump to start the negotiation with intellectual property and factories and companies selling fake goods. This could have been a global effort, raised America's ability to solve world problems and been a good starting point for further negotiations around trade. However, raising Tariffs to arbitrary rates and then saying the other side will definitely negotiate just seems off.
3) Less consumerism: This is a touchy subject because capitalist systems relies on growth. One of the positives that will come from rising costs for US consumers is people having to cut down on the things they buy. We think this is good for the planet and will help people re-think their ideas on what they need to be happy. While we want to sell you our keyboards, mice, and accessories, we also want them to last you a long time. Personally we want growth, but a contained and healthy growth is best. In China at the moment there is a lot of very negative competition with everyone racing to the bottom for prices and trying to knock out other companies. This just doesn't seem healthy to us. If there were more differentiated products and better value propositions, then the competitive landscape would be healthier for companies and consumers, and it's possible people would have more products that they love as opposed to products that they like and can throw away because they're cheap.
4) Uncertainty in business: The fear of everyone in business is uncertainty. We lived patterned lives that whether we know it or not, are structured around certainty. We have homes to go back to at night, friends to talk to, or family to rely on. What if all of that could change at any moment? Not to downplay those out there that don't have these "luxuries" in their life, but knowing what your prices are going to be is definitely better than every week worrying that your cost of materials might change. Someone is getting rich off of the uncertainty, but for the large majority, we're just waiting to find consistency once again.
5) What's the end goal here?: This question is a must. What is the true end goal? Is it just to go back to the negotiating table? Is it to stop China's rapid modernization and growth? Is it to level the playing field? I think this question needs to be asked and the answer should theoretically direct policy on the amount of tariffs a country would charge. If China has a heavily subsidized steel industry- which they do, then that specific product should have a high tariff so that the playing field is more leveled. But if China has a strategic cost advantage on producing clothing for example because of a large skilled workforce, investing in automation, and a good supply chain, then we should let them produce clothing as we will never be able to compete with them in that area due to their own internal competition.
Conclusion: Our thoughts may be a bit scattered and this could easily be a long book as opposed to a short blog post, however, like many out there, these tariffs seem arbitrary and not based off of Data or facts. We hope the US administration uses their influence and leverage to make fair deals and realize what's at stake when hundreds of thousands of small businesses rely on them to be a leader.