Hey guys so today is the day the De Minimis Exemption is no more. This repealed by Donald Trump which was a long time exemption for imports coming in under $800USD would not be subject to a tariff (import tax.)
How does this affect small businesses?
Like many MADE IN AMERICA companies, we use imported raw goods, wire, terminals, sleeving, heatshrink, connectors etc, but our labor is hand made by myself here in San Antonio, TX. Now in foresight, I opted to front load a lot of materials to help keep prices as low as I can. The issue with this is, I can order something today, the factory may take 2-3 weeks to process my order especially on something like our no print wire, we can order printed wire and it would ship immediately and actually be significantly cheaper but y'all really like our no print wire option and well we do too. So after those 2-3 weeks our order gets put on a cargo ship, which can take 40-60 days to arrive to US customs.
During that time of my order being prepped and transit time, the moment it hits the dock and is scanned in I am subject to the tariff. The Tariff could have been 34% when it left the supplier, and after all that transit time it could change again to let's say 75%. Meaning my terminal orders which is the actually what I use the most are around $750USD for just the raw good cost. At 34% my $750 dollar order is now $1105 and at 75% my order is now $1312.50.
This is not just for me, this is for all businesses, but small businesses like mine feel this squeeze way more.
But Joe, just buy your materials from America!
So about that, there are not any American companies that manufacture connectors or terminals. So we can't avoid the tariff even if we tried. We could source wire from a few of the companies located in the US but most require an MOQ (Minimum Order Quantity) of around 50,000 meters and about triple the cost. So not only am I paying triple for the raw good, I also have to front load for more product and it's at a higher price. My factories I currently use have an MOQ of 5000 meters so let's set this as an example. Let's say my cost from an overseas supplier is 40 cents a meter (3 feet) at 5000 meters for the MOQ thats a cost of $2000 pre tariff for 5000 meters of wire. Now let's do the same for the American supplier $1.20 per meter (3 feet) but it's 50,000 meters to meet MOQ, that is a cost of $60,000USD.
Well why not just buy less from an American supplier???
Well that is the issue, the MOQ is set to be just that, the MINIMUM I must order to either have a price per volume or if I have a special request like no print on the jacket. So I could buy less but then in the example of the wire, it would have black, white or silver print on the jacket.
Does this mean prices are going up?
Yes and no, like I said I did front load certain raw goods in anticipation of this. The hope is Donald Trump will resend the import tax to a normal amount and I won't have to make any adjustments to the price of goods. However if I run out of raw good and have to order and that order is hit by a tariff outside what we have set as the cushion zone, then yes I will have to impose an extra fee which will show up as (Trump Tax) on orders. This is a very tough time for all small businesses, we are doing what we can to weather the storm and those of us that make it will be stronger than ever. I appreciate all of your support and orders and try to be as transparent as possible about how we do things and choices with the business and this was something that while people say "Don't get political about things" well politics are the reason that prices for raw goods are in limbo and certain countries are not shipping products to the US right now so it needed to be addressed.
Catching up and emails
So I got sick post Quakecon (saw some of y'all there, was great to hangout and chat) with a nasty upper respiratory infection which took me out for about a week. Wasn't Rona luckily but something that manifested from my allergies and just got really bad. I recently got a new cell phone which was great until I realized all my authentication apps were on that phone which was wiped and I had to start the process of having Google verify I was me and needed to get back into my account. I just got back into my account where I could answer emails on my phone and not just on the PC that had the password cached. I work a normal job as well so I was not exactly at my PC to reply to all emails. I would try to respond to the backlog as I could between orders trying to catch up. We did have a pickup for some orders last week and they may have been misplaced by the courier company so I am remaking those orders instead of waiting to see if the courier can find the packages as no matter which courier I use when there is an issue they just seem to drag their feet on the matter. I am back into my mobile mail account and with the long weekend ahead I will be running through orders like a madman. Sorry for the delays, I have been talking to my apprentice I had at Titan Rig, when I was the manager over custom services and he is interested in helping part time when he has weekends free to help with orders.
Again thank you to all the support, I have more new and exciting stuff planned for the future including a rebranding that should be launching soon.
-Joe