A businessman recounts his experiences sourcing steel components from China despite increasing US tariffs. Although the new tariffs have added costs, importing from China remains more cost-effective and logistically simpler for him than sourcing domestically.

The narrative explores how global manufacturing infrastructure impacts small businesses and why certain industries still favor international suppliers even with additional costs imposed by tariffs.

Cost-Effectiveness of Overseas Sourcing

In the current trade climate, many businesses face tough decisions regarding their supply chains. Mike King, who operates vending machines and micro-markets, has opted to continue importing steel parts from China despite recent tariff hikes. His calculations reveal that even with added costs, Chinese imports remain significantly cheaper compared to domestic alternatives.

King’s business model involves producing steel boxes in China for use in point-of-sale systems. Initially considering American manufacturers, he found them uncooperative and expensive. With a base price of $250 per box, a potential 70% tariff would increase the cost to $825. This is still lower than the estimated $1,000-$1,200 cost of manufacturing in the US. Thus, the financial advantage of continuing with Chinese suppliers outweighs any tariff-related expenses.

Logistical Superiority of Chinese Manufacturers

Beyond pricing, the logistical ease of working with Chinese firms plays a crucial role in Mike King's decision-making process. The comprehensive infrastructure supporting manufacturing in China simplifies complex processes like powder coating and custom packaging, which would be cumbersome if managed domestically.

King highlights the seamless coordination among various Chinese entities involved in his production chain. From fabricating metal boxes to applying finishes and preparing specialized packaging, every step is meticulously handled without requiring additional oversight from his end. In contrast, finding equivalent services in the US proves challenging and often entails higher costs. Moreover, US companies tend to impose numerous restrictions and charges when adapting designs, further complicating the process. Consequently, despite rising tariffs, the overall efficiency and convenience of Chinese operations make them an indispensable choice for King’s business.