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Wyze pays $255k of tariffs on $167k of floodlights
- inverted_flag 1y ago> https://xcancel.com/WyzeCam/status/1917662183036706849 https://xcancel.com/WyzeCam/status/1917662183036706849 They’re getting attacked in the replies.
- ncruces 1y agoPeople reply to the “Good morning Vietnam” post with “OK, so the plan is working” and “you'll do in 60 days what you tried to do for a year.” Who are these people?
- JSR_FDED 1y agoNot sure, but I can tell you how they voted.
- Aurornis 1y agoThe top voted comments I see are all supportive so far. There are a lot of comments asking why they don’t move manufacturing to Seattle. This theme is common among people who don’t understand how manufacturing works right now: They don’t realize that a product like this has many different parts from different places, down to the dozens of little SMT capacitors. You can’t just move the factory and avoid tariffs because the parts still come from other places.
- JumpCrisscross 1y ago> can’t just move the factory and avoid tariffs because the parts still come from other places Trump has already started blinking on the China tariffs. It would be madness to move operations in the midst of this chaos—you’d immediately be undercut by cheaper competition.
- hshdhdhj4444 1y agoHe’s already said they will reduce the tariffs on China. He insisted there will be some tariffs but 145% is too high and it will come down. A company moving their production anywhere based on what the policy is right now would be foolish because the policy could change in the next 5 mins, but will almost certainly change within minutes if there are empty shelves.
- Timshel 1y agoIn a way it's worse since, you can't make plan to move if they become obsolete in 2 months but can you afford/survive waiting ...
- netsharc 1y agoHah, so Trump II is comparable to the start of the Covid pandemic: "we'll just have to hunker down and wait".
- rsynnott 1y agoOh, yeah, that is _very_ much how the markets are treating it. The idea that these tariffs might be _permanent_, is very much not priced in, at least not for the moment.
- netsharc 1y agoI'm looking more at the amusing angle of "Sir, the markets are comparing your reign as president to the pandemic.".
- SAI_Peregrinus 1y agoEven if they are permanent it'll be smarter for many companies to move manufacturing out of the US rather than in. If they're permanent the retaliatory tariffs other countries instituted in response to US tariffs mean that it'll be cheaper to build outside the US if selling outside the US. And the market of "not the US" is much bigger than the US market, so investing in the not-US market is more likely to lead to growth than investing in the US market.
- exmadscientist 1y agoI don't think there's enough manufacturing capacity in Seattle to absorb this. There are plenty of CMs here but they're small and midsized, not the big boys. And they're not in the habit of running mostly empty.
- bigfatkitten 1y agoAnd they’re not the sort of places where you get boards for consumer electronics made. They’re doing microwave/high frequency boards for companies like Boeing.
- exmadscientist 1y agoThey'll absolutely do consumer product assembly. It's short-run versus mass-production that's the real problem, most of them just aren't set up for high volume. Board fab though, not so much. I don't think we have a PCB fab left in the area after losing Prototron. I'd be more sad about that, except that I don't think I ever had a single order with Prototron that actually went smoothly and came back correctly.
- spaceman_2020 1y agoThis has been the most annoyingly infuriating part of the manufacturing conversation. People simply don't understand the scale and complexity of modern supply chains. By one estimate, it will take $40T to move all of China's existing manufacturing capacity and supply chains to the US, and it will take 20+ years if you're really motivated. People still think that order goes in and a factory makes the finished goods. In reality, individual parts can move across borders dozens of times before they're ready to be placed into a bigger product. Heck, I remember reading that Ford cars built in Canada cross the Canada-US border 11 times before they're finished
- creer 1y ago> By one estimate, it will take $40T to move all of China's existing manufacturing capacity and supply chains to the US, and it will take 20+ years if you're really motivated. Which also simply cannot happen because even if the US don't want stuff manufactured in "China", the rest of the world does. So the US, with higher local costs, cannot reclaim the economy of scale that went into the current chinese supply chain. Seems to me, at best the US can split it: a high cost chain in the US, a low cost chain in the rest of the world. What the US MIGHT achieve (on a long time frame) is move most of the chinese part to other low cost countries. That was already well under way. The US also don't have the available population to run these factories.
- wickedsight 1y agoI also find it interesting that there's this apparent idea that the US needs companies to move manufacturing to the US to improve... Something. The US is 9th in GDP per capita and has a historically low unemployment rate. I really don't understand what problem they're trying to fix here.
- AnthonyMouse 1y ago> This theme is common among people who don’t understand how manufacturing works right now: They don’t realize that a product like this has many different parts from different places, down to the dozens of little SMT capacitors. You can’t just move the factory and avoid tariffs because the parts still come from other places. This argument doesn't make a lot of sense. Suppose your company only does final assembly. Then whatever the value add of final assembly is, that's how much of the tariffs you can avoid by moving your own factory. You can eliminate as much as comes from your own contribution to the cost of the product. Meanwhile the company that makes the capacitors can avoid the tariffs on their value add by moving the factory that makes the capacitors. The fact that these are two separate companies doesn't really change much. Each one can move the part that they do. In fact, it actually helps. Suppose the capacitor company can't move for some reason, but the final assembly can. Well, then at least you can avoid the tariffs on final assembly instead of neither if they were both made by some conglomerate that refused to move either one. Not only that, suppose other companies make the capacitors in Japan as well as China, and then the company can do the final assembly in the US and avoid the tariffs on capacitors from China by buying the ones from Japan.
- lucianbr 1y agoSo moving one factory helps reduce the impact of tariffs on the final product from 145% to 135%, and to reduce it to zero you would have to move hundreds of factories, with tiny gains at each step. I think the original argument makes a lot of sense, and yours does not. "Just move two hundred factories on a different continent" might as well be "just invent a time machine".
- AnthonyMouse 1y ago> So moving one factory helps reduce the impact of tariffs on the final product from 145% to 135%, and to reduce it to zero you would have to move hundreds of factories, with tiny gains at each step. This is ignoring two things. First, for the earlier components in the supply chain, it isn't a reduction from 145% to 135%. It's a reduction to 0%, because the inputs are fungible commodity raw materials made in dozens of different countries, so moving the factory removes the entire tariff for the company selling that input to some other company. Which is what the manufacturer (i.e. the component seller) cares about, and they're the one who would be moving the factory. And second, the later stages of the supply chain tend to contribute the most value. Suppose you haven't moved the factory that makes the capacitors, but you move the factory that makes the phones. The phone costs $500 retail, how much of the contribution was the wholesale price of the capacitors? A dollar? 145% of <1% is tiny. So you both have a large incentive to move the early stages, because the tariff you avoid is on ~100% of the selling price from the perspective of the company making it, and a large incentive to move the later stages, because the later stages are the largest share of the final price. > "Just move two hundred factories on a different continent" might as well be "just invent a time machine". Why is moving 200 factories harder than moving one factory, when there are also 200 companies and they each only have to move one factory?
- techpineapple 1y agoFeels like maybe the tariffs are working if they’re talking about moving their production stateside?
- waxpancake 1y agoThey said they’re looking to “move out of China,” but that almost certainly doesn’t mean the U.S. Probably India or Vietnam, maybe Turkey or Malaysia.
- 0_gravitas 1y agoAnd even if the factory where they're assembled is in the US, they still need to import the materials/components from...most likely not the US; that's why CyberPower is looking awfully grim atm, assembly in the states, but they won't be able to make the cost of the materials remotely worth it for that reason.
- kalleboo 1y agoTheir own reply to themselves is a gif of Robin Williams yelling "GOOD MORNING VIETNAM"
- sam_goody 1y agoI have seen this comment a lot and don't understand it. From the U.S.'s point of view there are two goals: increase manufacturing in the States, and reduce manufacturing in China. Even if they don't choose the States, and even if things aren't near-shored, it is still a pretty big win for the administration, no?
- Mashimo 1y agoIf that was the goal, then why did Trump pull out of Trans-Pacific Partnership (TPP)? As far as I understood it, it was meant to work closely with a lot of east Asias counties to counter the influence of China and to promote trade. Now the US kinda pissed of a lot of those countries, and china stepped in to trade with them.
- 1y ago
- therealfiona 1y agoThey bricked my light bulbs that I bought a few years ago. I'd have more sympathy had they not locked me out from using them.
- danesparza 1y agoFrom a "humorous absurdity" point of view, I kind of love this comment. It has just the right amount of pettiness and vindictive sentiment -- with just a hint of "tone-deaf". Bravo!
- carabiner 1y ago[flagged]
- tomcam 1y agoAlso I’d like to know the tariffs China puts on similar items imported from here
- Cerium 1y agoHigher, most goods don't have import taxes, or rates were less than 10 percent. Looks like the rates for wall mounted lights were previously 5 percent.
- anigbrowl 1y agoThis has been written about in so many articles and discussed so extensively on HN and many other forums over the last month that it's hard to believe your stated lack of knowledge.
- Antipodes456 1y agoSo I manufacture cycling products from Taiwan + China, importing to US... he's paying 152% tariffs, on the cost price of the product. Previously would have been like 7% base, with maybe a 20% trade war tarriff added on. So for back of napkin: $10 widget, selling for eg $40. NORMALLY Product: $10, Shipping, storage etc: $10, Duties: $0.70, Marketing $10, Sale price: $40, Profit: $10 TRADE WAR Product: $10, Shipping, storage etc: $10, Duties: $15, Marketing $10, Sale price: $40, Profit: -$5 So to make even 15% profit, the price needs to increase from $40 to ~$52 So companies are either winding up and ditching their inventory in China (lose less), or if they can prices are going up 20+%. Inflation here we come At that price they be losing a significant amount on this. UPS has already laid off 20,000 people. There is about to be a tsunami of businesses winding up unfortunately (us included).
- sleepyguy 1y agoRyan Pertersen (Import Genius and now Flexport) said that if these tariffs continue on China, 80% of small and medium-sized businesses that buy from China will go bankrupt. Over 2 million jobs will be lost. He is not the only one calling for a small business Armageddon. The big corporations love it, companies like Apple got exemptions, it's why you don't here them freaking out. Hope Wyze makes it through this, long-time customer, and their cameras are great.
- carabiner 1y agoIn 2021, approx 500 years ago, Ryan tweeted out a series of measures intended to resolve a Long Beach port shipping jam. His measures did almost nothing and amounted to bluster and broscience. https://www.latimes.com/business/technology/story/2021-10-28/the-real-story-behind-a-tech-founders-tweetstorm-that-saved-christmas https://www.latimes.com/business/technology/story/2021-10-28... He also doesn't understand the concept of commercial airliners avoiding military airspace: https://www.reddit.com/r/ATC/s/1bTyTpBsqb https://www.reddit.com/r/ATC/s/1bTyTpBsqb
- sph 1y agoA person was wrong once, so can be safely ignored forevermore. Shipping lane jams nor military airspace have nothing to do with the matter of tariffs GP is talking about.
- putlake 1y agoShipping lanes is more Peterson's area of professional expertise, isn't it? He's not an economist.
- sleepyguy 1y agoWell, we have a front row seat to the shitshow. It will play out in front of everyone to see the results in real time.
- blooalien 1y ago
- almosthere 1y agoI'm guessing a ton of new companies will pop up overnight in India, Taiwan, Vietnam, S Korea that simply purchase components from China and resell them to the US. Not exactly helping anyone.
- mystified5016 1y agoAliexpress has been routing packages through Africa and other places to dodge tariffs
- whatevermom 1y agoThis will happen in Cambodia. They are building a massive amount of factories near Sihanoukville where the Chinese goods will be stamped with « made in Cambodia » and shipped right away to the USA.
- justinator 1y agoA Tariff Holiday in Cambodia you say? heavy surf punk guitar squeals in
- timschmidt 1y agohttps://www.youtube.com/watch?v=vatNMshZVfU https://www.youtube.com/watch?v=vatNMshZVfU
- busyant 1y agoI thought you were linking to this: https://www.youtube.com/watch?v=-KTsXHXMkJA https://www.youtube.com/watch?v=-KTsXHXMkJA edit: decades ago, I worked in a lab that was sequencing the genome of the Dengue virus (back when sequencing DNA was a Herculean task)
- latchkey 1y agoThey've been preparing for this day for many years now. Whole silkroad through Laos and Cambodia to Sihanoukville.
- vfclists 1y agoWill they have to pay tariffs on the equipment they have to import to manufacture them here?
- tpetry 1y agoFor sure. The tariffs don‘t make a difference of finished products vs parts of a product.
- lucianbr 1y agoProduction equipment and tooling isn't even parts, it's finished products. So yeah.
- Timshel 1y agoI think the point is kind of moot. I doubt they own any part of their manufacturing at the moment. Unless manufacturing already exists in the US (which I doubt here), I don't believe company this size has any chance to move manufacturing to the US The GamerNexus video already mentioned elsewhere explore those issues: https://www.youtube.com/watch?v=1W_mSOS1Qts https://www.youtube.com/watch?v=1W_mSOS1Qts.
- prof-dr-ir 1y agoSimilarly 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: https://www.youtube.com/watch?v=1W_mSOS1Qts&t=1394s https://www.youtube.com/watch?v=1W_mSOS1Qts&t=1394s They also address the question of moving their production to the US.
- danesparza 1y agoThis 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.
- prof-dr-ir 1y agoGood idea, I submitted it: https://news.ycombinator.com/item?id=43855933 https://news.ycombinator.com/item?id=43855933
- ENGNR 1y agoWas super interesting. 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.
- glimshe 1y agoThis. 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.
- voidUpdate 1y agoCould someone explain to an idiot like me what the benefit of this is to the americans?
- number6 1y agoIf they had bought American floodlights they had saved 255k in tarrifs. So if they had paid 200k for the floodlights they would have still been better of. One could argue, that there might be no American Floodlight Company - well here is the incentive to build one. Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry. If anything of the above comes to fruition... That's a different matter...
- herbst 1y ago> Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry. Is that what is planned? The US has a lot of dept internationally I assumed the additional money goes into paying that back, or at least stabilize the dollar somehow
- lurkshark 1y agoDuring the last Trump trade war with China, there was about $28B paid out to American farmers as “Market Facilitation Payments”. So basically the taxes collected from our own tariffs went to subsidizing the impact of retaliatory tariffs. The whole thing is pretty dumb.
- oatmeal_croc 1y agoFloodlight companies don't appear overnight. I suspect they won't appear at all, given the instability of the tariffs and the fact that the next President (or even the current one) could wipe them off, rendering their shiny new Floodlight factory completely useless overnight. This extends to any industry. Tariffs need to be stable and updated with several months of advance notice - otherwise they don't serve their purpose.
- bananalychee 1y agoHow much in retail value? I've seen a few small companies that have all their manufacturing operations in China pass on tariffs at cost transparently, and for those that have already adjusted to the current rates, the surcharge is much smaller than I expected (~30%), but I don't know how margins differ by sector.
- pinkmuffinere 1y agoIt does depend on industry, but I don’t think you should be too surprised by a 30% surcharge, and I have some math to illustrate! Let’s assume that this 30% surcharge exactly matches the increased cost due to tariffs (I think 145%?). This would mean that 1.45*manufacturing_cost = 0.3*MSRP -> manufacturing_cost = 0.2*MSRP. The manufacturing cost is 20% of the end price. A higher surcharge would indicate that the manufacturing cost is a _higher_ percentage of the end price. Consider that they’ll also have costs due to shipping, returns, staffing, marketing, R&D, and they need profit on top. In that context, 20% seems quite reasonable to me. Edit: you should expect to feel the highest percentage price increase in products that have become extremely commoditized, because they naturally have the tightest margins. Off the top of my head, I’m thinking toasters, microwaves, lamps, TVs, electronics cables, batteries, things like that
- pavlov 1y agoSo why not make them in the country? Let’s see… If you start building a factory in the US now, it will take years and you’ll be paying high tariffs on the equipment, high tariffs on the raw materials, high wages for unexperienced workers… And all of this in a political environment so unstable that your investment might be pointless six months from now if/when the president flip-flops again. World-class industrial strategy.
- blitzar 1y agoHostile and political. Fake news - everyone knows China paid. (/s)
- danesparza 1y agolol! OMG this is an amazing comment.
- averageRoyalty 1y agoFor the non Americans, it appears Wyze is a smart home company currently specialising in cameras, founded by ex Amazon (retailer) employees. I assume these floodlights are "smart" in some way.
- danesparza 1y agoAdafruit (an electronics manufacturer and retailer here in the United States) has been sharing insights in a video series called 'Tariff talk' as well: https://youtu.be/y36XchXA8BU https://youtu.be/y36XchXA8BU
- Scottn1 1y agoTarrifs have started to hit the boardgame industry pretty hard already, and as an enthusiast, I have started to really worry. Within a very short span, several companies have already announced drastic slowdowns in product production/shipments and staff, to some outright closing. https://stonemaiergames.com/we-are-suing-the-president/ https://stonemaiergames.com/we-are-suing-the-president/ https://www.cmon.com/press/an-update-on-our-internal-teams-and-company-focus/ https://www.cmon.com/press/an-update-on-our-internal-teams-a... https://www.greaterthangames.com/blogs/news/greater-than-games-team-reduced-in-response-to-tariff-crisis https://www.greaterthangames.com/blogs/news/greater-than-gam...
- Havoc 1y agoNothing will change until its consumers getting bills like that not companies. Which presumably is about to happen shortly
- bufferoverflow 1y agoAnd then sells them for $800K.
- sherdil2022 1y agoVideo is a must watch. Who needs enemies - when a country is made unhealthy (due to all the new regressive HHS directives), manufacturing anything is costly, importing is unfeasible due to tariffs, misinformation, deporting anyone without due process and on and on?