#wholesale-tariffs

Something I am definitely considering. I am in the linen apparel business, so I am exploring Portugal at the moment who have some good quality factories. Obviously price point is more expensive, though its cheaper than the 145% tariff.

@Minh Pham I've been working on moving at least some production out of China since last year. Although I am optimistic that in the long-term tariffs on Chinese goods will be a lot lower than they are today (our effective rate is now 157.4%!), I think diversifying away from China is still important for our long-term stability. We have focussed on alterative sourcing in Mexico as the US is our main market.

I am not aware of any tools that exist to help reliably estimate costs in different countries (although I would love to use them if they existed). I think the costs of sourcing in different countries will depend so much on the specifics of what you are manufacturing. I also think that without doing deeper investigation into a specific local context, it may be difficult to interpret headline figures about the relative costs of doing manufacturing in different countries.

For example, we make a lot of injection moulded products. In China there is a huge (and heavily subsidised) domestic plastic resin industry. This means factories can source even small quantities of raw plastic at low prices. By contrast, in Mexico the plastic resin industry is less developed and a lot of raw plastic gets imported from the USA. If you are only importing small quantities of a plastic to Mexico, it will be very expensive.

We were able to knock 30% off an initial quote from a factory in Mexico by switching the grades of plastic we used to match what that factory was already ordering in high volume for other customers.

The point I'm making is sourcing in other countries might require changing how you make your products in order to get the best possible price. It may be difficult to understand what it will cost to make your products in a given country without doing deep investigation.

One tool that might be useful is Import Genius (importgenius.com). This allows you to see where different companies who are importing to the USA are sourcing their products. You could use Import Genius to see where your competitors are manufacturing. If you see they are sourcing from countries other than China, it implies there may also be a good opportunity for you to source in those countries. This could help you to work out which countries are worth of more serious investigation.

wouldn't it be less risky to pivot acquisition to sell to new markets versus overhaul manufacturing... given that the tariff policies change weekly...

Hey Minh! We help a lot of brands with their packaging and have traditionally sourced from China but we've recently expanded into countries like Vietnam, India & Mexico (and continue to add more). We believe while a single or dual supply chain made sense till a couple of years back, a flexible supply chain is the name of the game now. The ability to lean in and out of specific countries based on macro conditions can be a huge competitive advantage.

We've helped a lot brands build supply chains outside China over the last year and continue to see more and more interest in having that flexibility.

That being said, it does also depend on the product and which countries outside China have the capabilities to produce something similar at a reasonable quality and price.

Always happy to chat more and share what we're seeing based on your product.

@Valerie Crisp I agree that diversifying revenue away from the USA is probably also good strategy. However, the USA is by far the largest consumer market in the world, so it's difficult to turn your back on that. I'm in the golf market and 40% of all the golfers in the world live in the USA. I would also argue that tariffs aside, there are good reasons to diversify a supply chain away from China. For example, we are looking at suppliers in Mexico because then we can truck stuff into the USA rather than relying on ocean freight. Your point still stands though - we've been pushing a lot harder on international business in the last month!