The author, a successful entrepreneur behind a popular kitchen gadget called Frywall, details how Trump's tariffs on Chinese and Taiwanese imports are severely affecting their business. The tariffs lead to increased production costs, forcing price hikes while simultaneously slashing profits.
The author emphasizes the importance of keeping production costs (including shipping and import charges) between 20-25% of the retail price for any home goods product. They highlight how the higher costs of producing the Frywall in the US compared to Asia makes it impossible to compete at a reasonable price point.
The article illustrates the significant price difference between manufacturing the Frywall in the US versus Asia. The cost of molds alone highlights the significant financial barrier to domestic production for small businesses. The author notes that US silicone products are usually high-value, low-volume, suitable for industrial or medical uses, not mass-market consumer goods.
The author concludes by expressing their concern about the government's promise of reshoring, viewing it as unrealistic given their experience. The narrative showcases the difficulties small businesses face under trade protectionist policies, forcing them to make hard choices between affordability and profitability.
I’m one of those scrappy entrepreneurs you see on Kickstarter and “Shark Tank.” Eleven years ago, shortly after starting a new job that was a bad fit, I had a life-changing encounter with a pair of pan-seared duck breasts. The first created a cataclysmic mess of my stovetop. The second, a few weeks later, inspired me to pre-emptively wrap my skillet in aluminum foil and create an improvised conical splatter shield. By the end of the following year, the Frywall was selling online and in stores.
The new tariffs on imports from China and Taiwan (and the threat of additional Chinese tariffs) are a kick in the teeth for my small family-run business, compelling me to raise my prices even as my profits are slashed. The government’s promise to re-shore the production of simple items like mine looks, from where I sit, like something of a fever dream.
If you ever decide to start a product in the home-goods space, here’s an ironclad rule: Make sure the cost of making your product, including shipping and import charges, is 20 percent to 25 percent of your retail price. If those costs are less, consider lowering your sale price. If your production cost is higher than 25 percent of the manufacturer’s suggested retail price, running your business will feel like climbing a greased pole.
You’ll struggle to afford the 50 percent wholesale discount that retailers expect. And you won’t have the money to fund Amazon fees, advertising, overhead, warehouse space, “free shipping,” legal costs, inventory growth and new product development. My invention emerged from the aha moment with the duck breast; as a company, it would spark to life only if and when I found a way to produce it for $5, and thereby sell it for $25.
Asian suppliers quickly emerged as my only option. I found that silicone products made in the United States were largely low-volume, high-value components for industrial or medical applications. The most competitive U.S. quotes were around $20 per unit, which would have meant retailing at $80. I fantasize about a world where splatter guards sell for $80. It doesn’t exist.
The price discrepancy extended to my first-year start-up investment in molds. What cost me $18,000 in Taiwan would have set me back $120,000 in the United States, a figure to make an untested entrepreneur with an untested product retreat to his desk job.
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