Podcast
127

MEP EP #127: Tariff Impacts with Chris Church

Podcast Notes

  • Chris Church
  • What kind of items in the Tariff list will impact US Electronics Manufacturing?
    • Passives, actives excluding ICs and diodes, mechanical components like switches, connectors, etc
    • Assembled PCBs from China
    • Biggest impact on pricing will come from the mechanical components, and specialty actives like high-current FETs
    • Shouldn’t see a huge impact from LEDs, while China has grown from 10% of the market of production in 2010, to over 65% now, the majority of their production — 95% — is used internally in assembling LED lighting for sale
    • Beware of counterfeit parts.
  • Short Term Impacts on the Market
    • Pricing on most things won’t increase until existing stock gets depleted from inventory at US warehouses
    • Initial impacts will be slightly increasing prices, potentially rapidly moving stock as buyers look to lock in current pricing
    • Overall, we’re predicting from about 2%-10% increase in COGS for most electronics produced in the US until all ICs are included, at which point the impact to COGS will increase dramatically
  • Long Term Impacts on the Market
    • We’ll see more assembly shifting away from US to places like Mexico which have lower tariffs on components between China and them, and little to no tariffs on final goods coming into the US
    • Flex has been downsizing their high margin/mid volume segment, laying off 10% of their workforce as demand for telecom and datacom equipment has dropped, and focusing on higher volume and lower margin builds in the US
    • NAFTA is not going anywhere anytime soon
    • Tariffs this is a boon for NAFTA, but not necessarily for US manufacturing
  • Impacts of Tariffs on the current Component Shortages
    • Expect the bidding to get hotter on high-volumes of short-supply passives, esp. w/ automotive ratings, and you’ll need to get closer to the manufacturers and other consumers in the supply chain to keep costs from ballooning on these line items
    • We are already seeing parts having gone up from half a cent to 10 cents on some high-demand capacitors at volume, this is before tariffs kick in
    • Overall, it’s not going to affect the availability of passives right now, as passives aren’t discretionary purchases, the increasing price won’t necessarily increase the supply in the short-term
  • Consumer goods?
    • No Tariffs on complete consumer goods yet
  • Will this hurt hobbyist/makers?
    • Those that are sourcing their goods from China, not really – de minimus for customs is $800, so if you’re importing less than $800 a time from an overseas vendor, these tax rates won’t impact you
    • Big issue is going to be around vendors who sell made-in-china boards (not final products), these companies are going to have a harder time covering the spread
    • Companies that make a lot of their goods in the US, like sparkfun, adafruit, etc. will have lower overall price increases, which will vary from product to product
  • Tariff list
  • Madell Pick and Place

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Download: MP3
RSS Feed: Link
Twitter: @MacroFab

Runtime: (01:16:51)

Hosts:
Parker Dillmann
Stephen Kriag

Guest:
Chris Church


Chris Church of MacroFab

Chris Church of MacroFab


Special thanks to whixr over at Tymkrs for the intro and outro!