a purported niche/low-volume electronics, but the profit is somehow dependent on BOM price? a tariff bump on a small BOM doesn’t take you from profitable to homeless.

if that happened, the business already had seriously bad margins, bad cash flow, over-leverage, or maybe he was just doing it out of love getting paid maybe back for his time or not.

tariffs might’ve hurt, but they don’t collapse a healthy niche hardware company where buyers are presumably also into the niche.

seems weird i dont get it. can you explain further?

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herdymerzbow 7 hours ago | parent | next [-]

gamers nexus did a great (and very long) video on the impact of tariffs on US computer businesses. Some of the manufacturers went into quite a bit of detail breaking down their costs and how tariffs would render some products so unprofitable that they would cease to serve the US market. Not sure if it necessarily applies to a niche/low volume business, but the impacts on a larger business were eye opening:

https://www.youtube.com/watch?v=1W_mSOS1Qts

tariffs have chopped and changed so much since this video that the specific tariff amounts mentioned are likely not accurate.

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iancmceachern 5 hours ago | parent | prev | next [-]

Hardware companies often operate on a relatively thin margin, especially as compared to say, software companies.

Let's say a companies margin was 40%. The cost of their constituent parts doubles due to tariffs, they are no longer making money as a result.

I hope this helps explain it for you.

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WalterBright 4 hours ago | parent [-]

It's more complicated than that.

For example, the company can raise its prices. How well that works depends on whether there is competition for the company's product. If the competition is also hit by the tariffs, then they're on an even playing field. If the competition is using native parts, then the competitor gets the business.

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AnthonyMouse 10 minutes ago | parent | next [-]

> If the competition is also hit by the tariffs, then they're on an even playing field.

That assumes the customers are price insensitive. If you're making vintage parts for hobbyists and archivists, maybe they're not; maybe they don't get a raise just because the price went up and your thing is the thing they cut out of the budget when it all won't fit anymore.

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iancmceachern 3 hours ago | parent | prev [-]

This is one of the great misconceptions.

There are often no "native" alternatives.

Even the machines that make the chips are nearly all made in one country and then shipped around the world.

The amazing, modern nature of our modern world is built on the collective effort and knowledge of humankind globally.

Globally.

	▲	WalterBright 38 minutes ago \| parent [-]
		There's concern that if all our chips come from one country, they could cut the supply off and make demands. That's called an "embargo". It's also done to protect local industries, hence the term "protectionism". For example, Canada's large tariffs on American milk are there to protect the local Canadian milk producers. AFAIK, Trump's tariffs are meant to serve the following purposes: 1. so critical supplies, like chips, will be produced domestically 2. to raise money for the treasury 3. to convince countries that have high tariffs to lower them in exchange for the US to reciprocate in lowering ours 4. to incentivize foreign manufacturers to invest in factories in the US 5. to use them as a negotiating tool for other terms favorable to US interests These are not crazy things. We'll see how things play out.

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esalman 7 hours ago | parent | prev [-]

Do you run a business with good margin, good cash flow, optimally leveraged and for profit? If yes, please tell us more about how tariffs have helped you.

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WalterBright 4 hours ago | parent [-]

If you've been making the products locally, the tariffs on foreign products help you.

	▲	scheme271 an hour ago \| parent \| next [-]
		Are your materials and supplies also locally made? The same for each of those suppliers. Very few things are entirely made in the US. How about your equipment? Are the motors, tools, electronics, etc also made in the US? Even companies making stuff in the US are being hit. Very few companies have their entire supply change within the US.
	▲	SturgeonsLaw 3 hours ago \| parent \| prev [-]
		Depends on your supply chain's exposure to foreign markets