Tariffs, Sourcing & Considering Alternatives
When the tariff policy changes were announced early April of this year, many of our customers were concerned. We have worked with some of our customers for around 20 years and have a solid track record of delivering quality products for them. Some asked if we should look at other countries for sourcing, which we did – including the US.
This wasn’t the first time that we’ve considered getting quotes from other countries. Over the years we’ve contacted suppliers in Vietnam and India, among others. The following will give you an idea of what we’ve seen.
About Sourcing from the United States
We are an American company. I would love to be able to source parts from the US if possible. Since the US government was hoping to use the tariffs to move manufacturing to domestic suppliers, we decided to get quotes from US sources for a few of our customer’s current products for comparison. The quotes we got back from US manufacturers were four to five times higher than the current Chinese price.
Even with a 30 or 50% tariff, the cost to import from China is still significantly lower than US domestic costs. Mold and tooling costs are also four to five times higher in the States than in China. This means that a mold that cost $5,000.00 in China might be $25,000.00 in the States.
About Sourcing from Other Countries
It comes down to this: China has the largest industrial base in the world; there is a factory for just about any product. This isn’t the case in other countries. For example, the sources from one country told us that they had difficulty sourcing from good plastic injection molders, which China has many of. Not every country has high end wood production factories. China does in abundance. Just about every type of metal product is available from China, whether it be a machined part, cast, forged, fabricated, or created some other way.
China is also now the world leader in research and development. In 2023, Americans filed 518,364 patent applications. Chinese persons and entities filed 1.64 million patents in that same year. Chinese companies are continually absorbing new technologies and finding new ways to remain competitive. Advanced manufacturing also translates into better quality control. Some low-value commodity products, such as clothing, for example, may be sourced from other countries, yet China still remains the largest clothing exporter in the world.
Speed, Agility & Quick Response Times
This was the most frustrating part of trying to get quotes from other countries, including the US was speed.
For example, we had to make many phone calls and send many emails to get just a handful of quotes from a US supplier for a project with large purchase quantities attached to it. In general we had a similar experience when contacting potential sourcing partners in other countries. Our three partner companies in China respond quickly to requests for new quotes, sometimes coming up with a new quote within days. In today’s business environment that moves like lightning, businesses have to be nimble. Not all suppliers in countries outside of China are slow, but for the most part slow response times were the norm.
While there are some prominent, internationally known companies that have decided to move production of their products to other countries from China, our customers have been staying with the Chinese factories we are sourcing from for them, regardless of the tariffs. Another consideration is that the tariff rates have risen for nearly every nation. Having a supplier that responds quickly, is competitive, and has strong manufacturing and quality control capabilities is critical. This is what we provide at Global Trade Specialists.
Contact us for more information and to get a quote.