The Death of Affordable Computing | Tariffs Impact & Investigation

Summary

The video explores the unprecedented impact of U.S. tariffs on the consumer electronics industry, particularly focusing on computer manufacturing and supply chains. Various industry insiders share insights on how fluctuating tariffs are causing instability, threatening U.S. jobs, and affecting global trade dynamics. The video offers a detailed examination of how companies are navigating these challenges, including cost breakdowns, potential relocations, and the broader economic implications.

Highlights

• The tariffs are described as a 'federal sales tax,' affecting prices across the board. 💰
• Industry insiders express frustration over the inconsistent application and constant changes in tariffs, leading to a lack of predictability. 🤔
• Some companies, like CyberPower, face unique challenges as they assemble all products in the U.S. but rely on imported parts. 🇺🇸🛠️
• The video explores potential solutions, such as moving production to lower-cost regions, though this is fraught with challenges and increased costs. 🌏💸
• Gamers Nexus invested significant resources to uncover the complexities and human stories behind the statistics. 🎥

Key Takeaways

• Tariffs are significantly hiking the costs of imported computer components, leading to higher consumer prices. 💸
• Frequent changes in tariff regulations create instability and uncertainty in the tech industry. 🙃
• Many companies, despite assembling products in the U.S., still face high costs due to imported components. 🇺🇸🔧
• Relocating production to the U.S. is seen as impractical and costly by industry leaders. 🚫🏭
• Consumers could experience price hikes or product shortages due to disrupted supply chains. ⛓️🚫
• The video calls attention to the ripple effects of tariffs beyond just the immediate price increases. 🌊

Overview

In a rapidly changing trade landscape, tariffs are hitting the tech industry hard. Many companies in the U.S. reliant on international supply chains for their components are finding themselves in hot waters as tariffs hike costs and complicate logistics. This video from Gamers Nexus digs deep into how these tariffs not only affect prices but also bring instability to a usually stable industry.

The video takes viewers on a journey through various perspectives, including those of CEOs, supply chain experts, and small business owners. Their stories uncover the personal and professional challenges faced due to volatile trade policies. The tariffs are not just about increased prices; they're about uncertainty that plagues future business planning and investment.

A central theme is the discussion of whether bringing manufacturing back to the U.S. is feasible. The video highlights the numerous obstacles, such as high labor costs and the complexity of current supply chains, that make this prospect daunting. Gamers Nexus emphasizes the real-world impacts these tariffs have on businesses and ultimately, consumers, urging viewers to contemplate the broader economic consequences.

Chapters

• 00:00 - 00:30: Introduction The introduction discusses the utility of learning through engagement rather than being a passive observer. The speaker acknowledges that information is readily accessible online, reflecting the irony of global trade decisions being researched by individuals who might not be directly impacted. The chapter hints at the broader implications of decisions, specifically in the context of global trade and logistics, likely involving container ships.
• 00:30 - 03:30: Tariffs and Global Trade The chapter titled 'Tariffs and Global Trade' discusses the rapidly changing import policies and tariffs during the first two weeks of April 2025, particularly focusing on the US. There is frequent media coverage on the topic, highlighting a 10% tariff from the US and a retaliatory 54% tariff from China.
• 03:30 - 06:30: Impact on Prices and Companies China has responded with significant tariffs, including a 125% tariff on US imports. The document also mentions a 245% tariff. Although these figures are pivotal, the narrative emphasizes understanding their impacts on companies and consumers. The transcript suggests that these tariffs and their consequences are affecting real businesses and individuals, with many wanting to share their perspectives and experiences on camera for this discussion.
• 06:30 - 18:00: Company Visits and Interviews Chapter 1: Company Visits and Interviews - The chapter discusses various meetings with key company personnel, including CEOs, founders, and frontline staff like logistics personnel and product directors. The discussions may involve financial breakdowns of product costs.
• 18:00 - 20:30: Complexity of Supply Chains The chapter discusses the complexity of supply chains, specifically focusing on how tariffs can drastically increase costs. An example is given where a $100 aluminum case ends up costing $195 after tariffs are applied at different rates to its components. This illustrates the complexities and potential cost implications of tariffs in supply chains.
• 20:30 - 30:00: Cost Breakdown of Products In this chapter, the focus is on the intricacies of product cost breakdowns within supply chains. The speaker emphasizes the importance of maintaining credibility and relationships built over 25 years in the entire supply chain. It highlights the challenges in planning and strategizing when circumstances change rapidly, and how initial plans can quickly become irrelevant. The discussion covers issues related to pricing and the financial implications when a company stops shipping to the US, resulting in losses on every product sold. A specific example is given where selling a product for $140 results in a loss.
• 30:00 - 40:30: Making Products in America The chapter discusses the process of making products in America, focusing on the collaboration between two long-time competitors, I by Power and Cyberpower. Despite having faced critical coverage from GN, these companies agreed to come together for a feature showcasing their US-based pre-built computer factories located in City of Industry, California. This indicates a significant level of cooperation and transparency in their operations.
• 40:30 - 47:00: Tariff Effects on Different Industries The chapter discusses the effects of tariffs on different industries, focusing on a particular company that handles assembly in multiple buildings across the United States. Due to tariffs, they have experienced uncertainty which impacts their operations, such as overtime work. Despite the complications from tariffs, they are currently not shipping into the United States. The company mentioned employs around 200 people.
• 47:00 - 59:30: Dealing with Tariff Changes Cyberpower heavily relies on American manufacturing and cannot depend on other regions for production. Although they have international sales, 80% of Cyberpower’s business comes from the US market. This chapter explores the implications of being an American-based company amid changes in tariffs, as well as the challenges and opportunities that arise from such economic policies.
• 59:30 - 69:30: Concluding Thoughts and Future Implications The chapter 'Concluding Thoughts and Future Implications' delves into the potential catastrophic impacts of tariffs and taxes on American companies. It explores how the economic instability and unpredictability, rather than the percentages themselves, create a high-stress environment that could potentially harm businesses significantly. While it's not necessarily linked to companies discussed at the table, the broader implications suggest that some companies could face devastating consequences under such conditions.

The Death of Affordable Computing | Tariffs Impact & Investigation Transcription

• 00:00 - 00:30 You don't have to be here for this. I could look things up online, ironically, like many of you are doing. I I guess it really just helps learn the scope of things and how much gets affected when there's a decision about global trade. Yep. They're a ship, so I think we'll be able to see it. Container
• 00:30 - 01:00 ship, huh? Too bad we don't have the drone, but they're probably not allowed here. How would they know? Good point. The first two weeks of April 2025 have had nearly daily changes to the import policies and tariffs, especially in the US. You hear about it in the news constantly. 10% tariffs. China is now hitting back. 54% tariff adding up to a
• 01:00 - 01:30 combined 104. China is striking back. 84% a 90-day freeze. 125% up to 145%. Overnight, Beijing announcing a 125% tariff on US imports. 245% tariff. But what we don't hear enough about is how this affects real companies and the people who buy from them, whether that's positive or negative. It was amazing how many people wanted to go on camera for this piece.
• 01:30 - 02:00 We met with everyone from CEOs and founders to frontline logistics personnel and product directors. That's where we're going. Hi. Yes. Nice to meet you. Nice to meet you. Um, so for example, if you have a $100 case, right, we break it down 50% aluminum, 50% whatever other material, the $100, there is the 20% that will get charged automatically for the entirety
• 02:00 - 02:30 of the 100. And then if you break it down 50% of the aluminum, which is $50, you tariff that 25%. So now we're at 1250. So 20 plus 1250, we're at 3250. And then if we do the 50% of the rest of the material, which is the remaining $50 of that case, that will get charged 125% reciprocal. So that entire case, the $100 case will get tariffed at I believe it's $95. Wow. So now we're paying $195 for a $100 case. So what do you what do
• 02:30 - 03:00 you do? You got to pay them. You know, like you can't abandon the container. You can do that, but there's potential lawsuit, right? But it took me 25 years to build a relationship entire supply chain. I I I don't want to ruin my credibility. It's like how are you supposed to come up with a plan when your plan 10 minutes ago is already like out the window. It doesn't make any sense. Pricing. I mean, we we stop shipping to us right now. And we are losing money on everyone we sell. So, how much are you losing right now? If you sell one of these at $140, I would
• 03:00 - 03:30 lose $91.26. Jesus Christ. For a Y40. [ __ ] Oh, man. And we even convinced competitors of three decades to go on camera together, even touring each other's US-based pre-built computer factories in City of Industry, California. That GN, which has shown a hyperritical spotlight on both I by Power and Cyberpower pre-built PCs can convince these two competitors to go on camera in each other's own American factories. It says a lot about their
• 03:30 - 04:00 uncertainty around tariffs. Is all your assembly in this building or you have No, we have multiple buildings. Multiple buildings in the United States. Yes. all in the US in the United States. So, usually we do uh we do have a lot of OT because of of that all whole tariff going on. We're not doing OT for the last few weeks. How many employees do you guys have uh here? Uh around 200. And I want to point out some irony here. Right now, our solution is we're we're not shipping into the United States and
• 04:00 - 04:30 we're depending on other regions to be able to move forward. Cyberpower manufactures their products here in America. They don't have other regions to do that. I see where the irony is going. So at a certain point, we may not collapse because we're able to sell internationally, but Cyber Power is effectively an Americanbased company. And what percent of your business is in the US in terms of purchases, I guess, or orders, whatever? About like 80%. Wow. Yeah. Okay. 80 plus. Or more. All
• 04:30 - 05:00 right. Yeah. That's yeah, possibly more. It would be close to 80 to 90%. Do you think this kills some American companies? Not necessarily anyone's here at this table, but this is this is like a high stress event. This will kill some people. And the common theme talking to everyone wasn't necessarily the percentage amount of the tariffs or the taxes, but the instability, uncertainty, or unpredictability, using the manufacturer's words, of how these
• 05:00 - 05:30 tariffs were rolled out. What do you think is the the biggest problem or challenge with how these tariffs are being rolled out? Forecast change. The entire dynamic during business changes, you know, they change on daily basis. I think it's just like there's no consistency. But this time the problem is with it changing constantly, everybody's wondering like, oh, what's going to happen tomorrow? What's going to happen next week? But if it keeps changing, then we have no idea when this will resolve itself or normalize. I just hope um there's more
• 05:30 - 06:00 certainty. A lot has happened like a lot of changes in the new cycle, a lot of like confusion, but yeah, this is very different and I think the the uncertainty of what's going to happen next week um is what's causing all the markets to be very jittery. Yeah. With things changing daily or weekly, I think this is more off-putting for any business than it helps. It it just makes things a lot worse from my perspective. And with this, if I see a tariff of 20 or 40% one week, 50 to 60 a day later,
• 06:00 - 06:30 then I see it 120%. Then I see, well, electronics are maybe exempt and in Bloomberg and then I see on Truth Social, no, that's not actually happening. I have no idea what that means. So, I can't make decisions because it's not about it being a high tariff. It's about not having a clue what's going on. We brought you this video with store.ex.net. This video cost us over $10,000 to put together between the travel and production time, not counting all the opportunity cost of skipping videos for a week to make an important piece. To support our audience, we're maintaining our prices for all current inventory despite cost
• 06:30 - 07:00 increases on incoming orders. We seriously need your help to continue making videos like this. Head over to store.gamersex.net to grab one of our brand new GPU paper launch t-shirts featuring a GPU going into a shredder, our honeypot foil t-shirt, or our large PC building anti-static modats with pinout diagrams and screw tracking grids. You'd probably also like our extremely heatresistant silicone project and soldering mats, which also provide a high quality work surface for all kinds of work, including, of course, soldering. You should also check out our tabletop RPG and gaming dice sets with
• 07:00 - 07:30 seven sharp edge resin dice in each kit, including either embedded actual e-waste inductors or Snowflake the Cat miniatures within the dice and the included wooden box, also featuring an included guard. Heads up, all of our products will eventually be affected by tariffs in some capacity. Even the ones made in the US, like some of our glassware because upchain logistics much larger than us, are already affecting the supply chain. We're committed to maintaining our prices as long as possible to try and weather the storm together with the audience. It's likely we'll have to raise them eventually, but
• 07:30 - 08:00 for now at least, you can go to store.gamersac.net to support this kind of on the ground content while getting something awesome in return. Thanks for your help. Now, back to the program. This was a big adventure. We booked a one-way flight to Southern California, spoke to Cooler Master 15 minutes after landing, drove to City of Industry, and spoke to four other companies the same day that we woke up at 3:00 a.m. and flew across the country. Made an existential bet. Well, whoever dies first was better. Okay, that is likely the real barometer. Deal. All right. All right. We've got it figured out now. We'll know. We'll know which one of us
• 08:00 - 08:30 was better at being obsessed with work. Packed everything. Rented a car to drive up the coast. Attempted to ask local wildlife about tariffs. Excuse me, sir. Can you tell me what you think about the newest tariff exemptions? No comment. Came to a sudden realization. Get him take a breath before he dove under. This whole trip is really just an excuse for I to [ __ ] around. Continued driving to San Francisco to ask Corsair this which
• 08:30 - 09:00 product category contributed to Corsair's growth the most and why was it RGB LEDs? Yeah, but it flew to Austin, Texas to see this guy. Well, [ __ ] you. I mean, seriously. Got back on the plane and flew to North Carolina. Then got in a car, drove to Wilmington to go here. We shifted all our growth to here. And we were coast to coast in a matter of days and we learned a lot about tariffs. For this story, we spoke to a lot of people and companies to learn
• 09:00 - 09:30 their perspectives. We met with and filmed discussions with companies ranging from the size of an independent repair shop in Austin, Texas, to the publicly traded Corsair component, which did over a billion dollars of revenue in 2023. Some people are taking the tariff situation harder than others. You're not tired yet, huh? Tired. Not tired. No, we're already rolling. That's great. I'm hung over. Okay, sure. Do you want me to not include that or include that? I think the torture is part of the story. Got it. Is the handover related
• 09:30 - 10:00 to the tariffs? You cannot unmake an omelette. I'm not sure. Got it. Okay. Now, what might happen is our Home Labs products? Maybe the differential for the offshore built stuff's uh maybe it's going to lessen. Mhm. And you mean the gap might close. Gap might close. So, in other words, saying that the uh are you saying the competitors competing Home Labs products will approach your price? Yeah. Yeah. They they'll probably come up. we deliver value today. Hey, if that
• 10:00 - 10:30 lessons, well, advantage us, right? It's it's all good. And we want to hear all of their perspectives. Although everyone today feels the same way about the uncertainty, some feel that way for different reasons. With over 8 hours of interview footage, we have to cut these down for time, but we're not filtering what anyone is saying. The whole point is finding people who say things that we might not have thought of, and that includes things we may agree or disagree with. In order of appearance today, the discussions come from height, a computer case and cooling manufacturer in city of
• 10:30 - 11:00 industry, California. Thermal Grizzly, Berlin, Germany based factory with worldwide contract factory usage for liquid metals, thermal paste, and components used in the components, giving it a deeper supply chain position and EU insights to speak from. Cooler Master, a manufacturer of PC and industrial components alike, like automotive heat sinks. Cooler Master owns many factories in China, but also works with contract factories worldwide. Straight Forwarding, a freight forwarding and logistics company that the other companies hire to figure out how to import products to the United States. Straightforwarding would have
• 11:00 - 11:30 the most precise knowledge here about the tariffs of our group today. Rossman Repair Group, an Austin, Texas-based repair shop that imports soldering equipment from China and sells the tools for its online store in the US. Corsair Components, a mammoth of power supplies, system memory, solid state storage, and nearly every other part. Corsair CEO and founder Andy Paul provided executive level insights. Protocase, part of the 45 drives NAS and server provider family. Protocase is a contract manufacturer that makes its own server cases in Canada and just opened a new
• 11:30 - 12:00 facility we drove out to in Wilmington, North Carolina. CyberPower, a pre-built PC manufacturer with its assembly factory in City of Industry, California. I power competitor to CyberPower, also with its assembly plant in City of Industry, California, and Parent of Height. This was a huge trip with a ton of lastminute logistics on our side. To begin to understand any of this situation though, we need to go back to the start of this journey of getting the story. It's been a quick
• 12:00 - 12:30 one. A timeline would help start us off. We've tracked the evolving tariff landscape and we'll try to summarize its changes as briefly as possible. We're publishing the entire timeline with our sources on the website linked below, but here's the short version. The current US administration announced it would be imposing a 25% tariff on Canada and Mexico, but then decided to pause those tariffs before deciding to unpause them. And then they were paused again, but only for cars. Then some exceptions were made to take into account agreements signed regarding the USMCA, a North
• 12:30 - 13:00 American trade agreement Trump signed during his first term. Beyond Canada and Mexico, the administration announced vary and widespread tariffs on most other countries, including many that manufacture PC parts for this industry, like 32% on Taiwan, 36% on Thailand, and 46% on Vietnam, but soon let off the gas on that plan for 90 days and instead relegated most countries to a 10% across the board tariff. Meanwhile, new tariffs on China, not counting previous tariffs that have been in place, started out at 10%, only to rise to 20%, then to 54%, then 104% before ultimately landing at 145% all in the last couple of months.
• 13:00 - 13:30 Some of these even were happening in the middle of our meetings with these companies. The US administration most recently said that the tariffs may go as high as 245% on specific goods with inbound docking fees. So, it's still developing. Eventually, some exceptions were made for electronics, which includes smartphones and computers. But then the president said that no tariff exceptions had been made and that the administration is looking into further tariffs on semiconductors. As you can see, these are Schroinger's tariffs. As long as you don't open the container, the goods are both tariffed and untared. And during our trip, the tariffs changed day by day. April 2nd, 3rd, 4th, 5th, 7th, 8th, 9th, 10th, 11th, and 13th all
• 13:30 - 14:00 had developments in this timeline. But at this point, it's not we can't predict anything and our business relies on consistency and predictability. So when we asked the companies this question, do you happen to know what the tariff rates are right now? The answer changed based on the hour of the day that we spoke to them. Oh, there's a 100 plus% tariff. All in all, we're looking at about 145 with the new tariffs imposed. Yeah. To our understanding, uh, it's 145%. Yeah,
• 14:00 - 14:30 that's general. Yeah, general. The big number. Okay. So, the big number that we just had that is official as of last night, we have 125% plus 20%. Plus the 25% that happened in 2018. So, that would bring your total to 170%. Here's why we're talking about all of this. Consumer prices will go up as a result of this activity. Some people may hold a view that this is a necessary short-term pain. Others may hold a view that it's
• 14:30 - 15:00 unnecessary. We're just here to talk about what's happening. Manufacturers like Height, MetaPCs, Nase, Razer, Asus, Lenovo, Framework, Dell, and Nintendo have already been in the news for price increases for duties being passed on to customers or even just halting shipments to the US entirely and drying out that market. Should you guys send them somewhere else, the product or what? We try to reroute them to different countries, different regions. So when current inventory goes out, we're dried out. This becomes a complicated topic
• 15:00 - 15:30 with many branching valid reasons for price increases and some branching less valid reasons. Some manufacturers may smokec screen and use this to increase prices more than strictly necessary, which we'll talk about today as well. For people asking, well, these companies are just they're taking this opportunity to use the tariffs as a smokeokc screen to permanently increase the price. As for valid reasons, there are many. Most of you likely know that ordering more units gets a discount. We'll give you a real world example with us. If we order 23 t-shirts, we pay $4 more per unit than if we buy 100 t-shirts and $5.25
• 15:30 - 16:00 more per unit than if we order 576 t-shirts. These are real price deltas for us. Here's a computer part example using some real numbers. The higher tariff cost causes reduced liquidity due to higher import taxes, which causes a reduced order volume, which causes a higher cost per unit due to worse economies of scale. causing higher tariff totals on those units because the cost per unit goes up and it's tariffed at the same rate causing a higher cost of money via interest because most products are brought on credit causing the customer to pay more. There's a ripple effect that isn't as clean as just the percentage tariff. If you have higher cost from tariffs,
• 16:00 - 16:30 uh does that then potentially impact your order volume? Absolutely. And if it impacts your order volume, then does it also affect your economies of scale and your price per unit? Yes. If let's say dollar volume stays the same but your cost increases that your economy scales and your quantity is just going to drop. So that might impact all of quantities. Does that impact the average cost of the unit typically? Yes.
• 16:30 - 17:00 Increase average cost per units um increase cost everything associates potentially pass on to the uh end users. So if you pay $3 more per unit because you ordered a thousand fewer units, correct? Right. Yeah. The tariff is now applying against that $3 increase as well. Is that accurate? Uh yeah, according to what you say, this is how we we understand it as well. Yeah. Um so that whether you pass on the user or we absorb those costs, right? Right. But if
• 17:00 - 17:30 it's like 100% and you pay $3 more now is like $6. Yeah. $6 more. Right. this like it seems like it it's it's like um snowball effect. Correct. Yeah. So, okay. And then by the way, tariff we had to prepay those. We had to prepay also creates our cash flow burdens, right, for the finance team. So, we probably potentially need to borrow more money from the bank to operate business, increase interest, increase everything
• 17:30 - 18:00 else. Like you said, snowball effect, right? Yeah. One of the major counterpoints to all of this is why not make it in America. We'll start with CyberPower, which actually already does build the computers in America in California. In fact, that's the only place they build them and they have hundreds of employees who do it. Now, CyberPower assembles computers. They don't make the components that get assembled into the computers. But this is interesting because when people think of a motherboard factory, they might think the entire board is made in that factory. But in actuality, that factory
• 18:00 - 18:30 is just like CyberPower. It's assembling all the parts from over 100 other factories downchain with typically about 10 to 20 major component suppliers for one motherboard. So really an SMT line for a motherboard is the same concept as an assembly line for a pre-built PC. They're bringing in parts from lots of other places to put them into a product. Yeah, I think it starts off with your question which is like do we want to make things in America and how would we go about doing it? Right. And that's of
• 18:30 - 19:00 course a question we think about all the time. We always think about, you know, where we source things. The more we control, the better. But this is just represents one out of like anywhere between nine to 10 components that make up the basics of a computer. Mhm. So the first thing we'd have to do is talk to all the manu manufacturers that make this motherboard and ask them to bring this motherboard production over to America. Right. And now while these companies might bring the motherboard production manufacturer over to America, they don't
• 19:00 - 19:30 actually make all the parts that make up this motherboard. There could be anywhere between 10 to 20 other companies that make up these individual parts that are still being made in other countries. MSI had given me numbers years ago how many components are on a motherboard. uh to counting all the tiniest resistors and caps and on a high-end board top of my head it was thousands of components like counting all the smallest ones. So a lot Yeah. a lot makes up a motherboard. Yeah. And so these these
• 19:30 - 20:00 guys who make these things they specialize in it. They make just that one thing. Mhm. And sometimes it's so important that when they have a problem at their factory all the motherboard companies start having problems. They all source from this one guy in China or wherever. So you'd have to bring all those component manufacturers over as well to bring it to say that it's made in America and avoid the tariff. But once you do that, these guys that make this plastic or this aluminum, they also have to source their raw materials from
• 20:00 - 20:30 somewhere else, which then ends up having a tariff as well. So no matter how many companies we bring over to try to complete this ecosystem, this supply chain, somewhere along the line, there's still going to be sources that must be tariffed and made overseas. And then you'd have to bring that entire process all the way up to this to the final process of us putting this into a computer all into America. The goal of the tariff was to to bring manufacturing back to America was the argument, right? But at the same time, it it is a good
• 20:30 - 21:00 goal. Is a goal that we undoubtedly want to achieve, but is this the right way to do it is probably where I would say no, I don't think that this is the right way to do it. There's other ways to do it. And now that you understand the complexity and hopefully your viewers understand this huge supply chain and how it works that they realize that it's not something you could turn on overnight. That's just the main thing. It's achievable but it requires a lot of people work together and it could take decades or years to really achieve this while still making the product
• 21:00 - 21:30 affordable because we haven't talked about that yet. Even bringing all this stuff to America doesn't guarantee that it's affordable. So people who are thinking about doing this, they have to consider all these other things. What is the cost going to be? Will people be willing to pay for it? Worldwide manufacturing um is anywhere from sort of 2 to3 to $4 an hour typically. Here, you know, the minimum wage in most states is 15 to 20, but most people want more than that, right? Um 725 where I
• 21:30 - 22:00 live. Yeah. Wow. 725. But you can see that even even um even if you if you did that most people aren't going to sign up on mass to do you know the four million unemployed Americans aren't looking for you know sub $10 jobs certain jobs. So I think that it's very very difficult to move manufacturing banks. I'll use a computer case because it's the one I was the product manager for for the longest. If you use a computer case you think about the cardboard box the ink that is printed on that cardboard box. The tape that's used to shut the cardboard box. the foam inside the cardboard box, the
• 22:00 - 22:30 the paper the manual's printed on with that ink. Um the case itself has steel, it has glass, it has maybe aluminum, it has some ABS plastics, it has rubber over rubber grommets, sometimes different durometers of rubber, screws, screws that come from one factory, fans, which are usually either bought from a a fan motors for fans, motors for fans, wiring, the connectors that go into the three or four pin headers, you know, all of those elements um have to come from somewhere. So, there's a supply chain that goes, you know, decades back into
• 22:30 - 23:00 who started this factory that makes nothing but screws, right? Um, and that's right. Yeah. The screw factory is two blocks away from the case factory, which is next door to the uh the cardboard factory, which is next door to the ink factory, which is next door to the foam factory. And if you want to go from I have nothing to I have a completed product in one city block, you can do it in China. You can't do that in North America easily right now. Um, and it would take a long time to get to that point. This question came up in every
• 23:00 - 23:30 single interview we did and it interrupted the flow too much and lost some of the meaning when we tried stripping it out in the edit to shove it all into one section. So, we'll talk more about this throughout the entire video with everybody as we go. It'll be timestamped. Our first big meeting is with Height. Height is a computer case manufacturer headquartered in City of Industry, California. This meeting includes unique insights to the actual costs and margin structure of some products which helps us to understand the real dollar amounts affected by tariff changes and this kind of access
• 23:30 - 24:00 is very uncommon. All right. So this this is really important. This is something that manufacturers are reasonably very secretive about and it's the cost to actually make something bring it in. It's basically the the cost of the good itself and that means we're going to see margin. This is incredibly rare. Height has broken down the cost of a Y40 and then a thick Q80. Right. Yeah. Right. And so we'll do a quick preview and then we'll cut back and explain it. So I think this is really an explanation of why we can't even afford to bring the
• 24:00 - 24:30 products into America any longer. And I'm here to show you how how it is to make a Y40 and what's its cost structure is. So before we start planning any product, we start estimating the monthly run rate and how many life how many how many months it's going to going to be in the market. So we start with 2,000 units per month, a lifetime of 24 months and a total of 48,000 units per lifetime. During pre-production, we had three mockups that were made. We had an NRE
• 24:30 - 25:00 development cost of $30,000 and a tooling cost of totaling $239,000. NRE stands for non-refundable engineering. Okay. So that's like using services from a factory to help do the engineering for the product and then non-refundable tooling. Yeah. Right. Got it. Okay. So our total pre-production investment totaling 286,000 which advertised per unit of 5.98 or $6. So before every before everything
• 25:00 - 25:30 happened um before February 1st, our FOB price from the factory is 71.75. And you could see all the events that happened. This is blank. So our tariff charge is $0. Our case per pallet. Now we go into freight. Our case per pallet is 20 cases per pallet, 30 pallets per container, and 600 case per container. So now we start calculating how much is per unit's freight charge. 6,000 $6,000 per container divide by 600 $10 per unit.
• 25:30 - 26:00 1,500 of documentation fee, trucking fee, unloading fee, and port fees. This is known as the local charge advertised to $2.50. So the total freight charge per Y40 to bring into uh the US doortodoor is $12.50. So if we add up that all together, our FOB price is $71.75 plus the freight in $12.50, 50, the storage fee of $2, and an advertised
• 26:00 - 26:30 investment of $5.98. And this is all per unit. This is all per unit. Our landed cost would be $9223. In order to sell at $129 MSRP and to have the retail margin of 25%, our height margin would be $527 while we take 5% margin. Is that retail margin pretty standard? Retail margins are pretty standard. they are really hard to negotiate um that percentage. Okay, this is uh basically
• 26:30 - 27:00 nothing. Yeah, I mean you you might even call it a kind of loss leader, right? This became a product that we were effectively just growing market share with making uh about $5. And you can see the retailer, they have no problem with that because the retailer was still making their 25% margin. They're making 32.49 while we made $527. And this is pre-tariff mind you right okay so you know you can imagine now if you add any
• 27:00 - 27:30 tariff to this the response isn't like oh we need to go and re-imagine how we build these things it's this product is non viable we can't sell products at this price anymore and this is how you get to potentially not bringing them to the US [ __ ] yeah all right what's we have it gets worse so it gets worse So uh 2018 there was a tariff uh called section 301. It was a 25% tariff on uh
• 27:30 - 28:00 certain items. The case was excluded. Um but that will end uh it might extend. It might end during May 31st. So we put a price right here. So we'll show show the cost a little later. Um February 4th, we have the 10% tariff on the cases. So that increased our cost by $7.18. During March 4th, there was a 20% increase on tariff on the case. So, brings our costs additional
• 28:00 - 28:30 $14.35. There was during March 12th, there was a 25% aluminum tariff, but this doesn't apply to the case. This applied to some of our coolers. During April 5th to April 8th, there was a 10% reciprocal tariff that was added that increased the cost by $7.18. And currently we have a 125% reciprocal tariff that increased our cost by $89. Reciprocal I guess their word here. Yeah. Reciprocal. Yeah. Okay. So you
• 28:30 - 29:00 start looking down our our landed cost here during different times. Now during the first wave it would be $99 and it increase to 106 113 and then 196 and then May it would be 214. if they don't if they don't extend the exclusion. So $196.26. Um so you're now you're you're $60 beyond what you want to sell it for
• 29:00 - 29:30 basically. Yeah. As our cost, right? And that that we and the retail margin has in the retail well the margin's the same. The retail profit has increased. Yeah. We increased the price. You know, originally it was 150 and then we had lowered it down to 130, but as a response to the tariffs, we had to increase prices. Um, so it's back up to 140. And you could see that the retail is actually retail margin has actually increased on their dollar. So they're making more profit than before, right?
• 29:30 - 30:00 And we are losing money on everyone we sell. So how much are you losing right now if you sell one of these at $140? I would lose $9126. Jesus Christ. For a Y40 [ __ ] Oh man. And And I can tell you that uh the margin on like a Y70 Touch, it's it's worse. It's worse. We actually we that that touchscreen is the most expensive, lowest margin part in a Y70
• 30:00 - 30:30 Touch. And that's because again, we're pushing to gain market share. Um, if we charged what everybody expects their margin to be, this would not be a viable product in in the market. Customers would not be able to afford that. We wouldn't be able to scale our quantities to hopefully eventually get our costs down. Um, economies of scale play a huge role here in balancing uh that that pricing structure and it's just it's
• 30:30 - 31:00 just not viable. this this market as it stands today with these products, it's not viable to manufacture and bring these products uh to sell in America. And then your worst case is $214. Worst case is the landed cost would be $214 and we'll lose $109. So you're going to see companies be a lot tighter about bring only bringing in products that have the most guaranteed sell selling opportunity, right? So, you're
• 31:00 - 31:30 going to see maybe less colors or less special SKUs or less um less low quantity products and more just middle of the road. Yeah. Middle of the road volume because imagine if you brought in a product, you paid the tariff and then it sat in a warehouse and became aging and then you had to lower it even further. Um it the whole situation is is it's too unviable. So that that gets to a question. The uh sort of the
• 31:30 - 32:00 the one of the things I've seen posted and maybe this comes from like a devil's advocate position. Uh one of the things I've seen posted is the cons the concept of uh this inventory was already in their warehouse. The tariffs came into effect. They're increasing the price because of the tariffs. But what about the inventory that was already there? Now they're making more money. Yeah. Is it I mean it's it's all about scale or or like um you're going to extrapolate
• 32:00 - 32:30 this and so you could already see we're the margin that we were making on the inventory that came in before the tariffs any tariffs we're making $5 of margin. Um, we're rolling in it, right? Big big money dollar signs. We're making five dollars a margin on what came in before the tariffs. And then after the tariffs, we are losing $2. So, it's not even a question of, oh, well, this was here
• 32:30 - 33:00 first and now you're raising the prices, so you you're actually making extra money because as far as we're aware, these tariffs are in place indefinitely. So, it's not just one month in, one month out. It's one month in, every other month is out. And that's going to average like when you average those two months together, we're losing money. Yeah. Um, and how how many how many units might you float, you know, of
• 33:00 - 33:30 something like a Y40? So, you know, traditional business, they teach you that you want as many churns as possible, right? Because you don't want to bring in a whole lot of inventory that just sits. Uh, that's a it's a that waste money. Storage costs money. Um, things get damaged. Cost of money costs money. Yeah. The interest rates, you're paying interest. uh because this stuff is usually brought in on credit. So, you're taught to bring in just what you need and then you want to churn it as
• 33:30 - 34:00 many times as possible. Inventory churn, the higher that you can do it really, the better business that you are. Um so most companies, they don't have the credit, they don't have the cash flow, they don't have the storage space, they don't have the margin to cover any of these additional uh costs. Um, so it's like even if you get this like window where maybe the tariffs are like paused again for an indefinite amount of time, um, you you may not have the cash flow to take advantage of of that that
• 34:00 - 34:30 opportunity. If they're paused, so you you bring stuff in, tariffs go away. What happens to your MSRP or your price at that point? Theoretically, we should be able to get back to at least close to what that MSRP is, but there will certainly still be additional cost just due to poor efficiency, poor operations, and poor logistics due to these unprecedented events. If you tried to buy a product
• 34:30 - 35:00 from me today, I could not afford to sell it to you. Um, and trying to reap that profit back afterwards doesn't sound like a sound business strategy. I don't know when this is going to end and I certainly don't want to be punitive to my future customers to cover the the debts that were brought on by Should you guys send them somewhere else the product or what? Yes, we try to reroute them to different countries, different regions. Um, currently we have we're focusing on region because we're not
• 35:00 - 35:30 bringing any product into the United States because of these tariffs. Yeah. And the way the way you can look at it is um up until now America was our number one region for height. We did about 65% of our revenue revenue in America. Um that region uh we're no longer shipping into. So it's not even listed. Uh it's not in our top three. It's not anything. So when current inventory goes out, we're dried out. We'll just have to wait until we have another strategy to fulfill the US
• 35:30 - 36:00 inventory. So if most of your marketing efforts have been in customer acquisitions been in the US, you're going to have new costs to try and get people in countries you may not have targeted before and that those are investments in those regions. Right. Right. But those costs are also I guess lower than what you're facing here. Everything is a better option than paying these tariffs. There there's no world in which it makes sense for us to pay these tariffs and sell these products in this region. it makes more
• 36:00 - 36:30 sense for us to give up on this region and move to another region. Um, right. Yeah, that's a I've never said that out loud. I've never said that out loud. Um, that's a hell of a statement. And then I I I don't know if this is what you want to get into now, but you know, the looming question is like why don't you just make them in America? I I do want to get into that. Uh, one question before that, maybe two. one is um so Jeff looking back at your numbers here if we take let's say the second to worst
• 36:30 - 37:00 case scenario that $196 landed cost what would you to to keep the same margin you were at assuming you're even okay with that what would your new MSRP have to be it would be $329 [ __ ] for a Y40 and we would still be making $5 the Y70 is a Touch Infinite is I where where does it land? $600 700 like easily 600 $6700. And I want to be
• 37:00 - 37:30 clear, we we probably take less margin even before the tariffs than most of our major competitors because we're the young upstart that's trying to gain market share. Uh if you ask a lot of people, they don't know who height is. Well, if if the retailer sells an $800 case, they're pretty happy, I guess. Oh, they they're Yeah, we haven't heard any objections from them. Oh, man. But it
• 37:30 - 38:00 turns into Are consumers really going to start paying for $800 case? No. I mean, you're going to sell I mean, even before Case Labs tried that, those were made in America, too. I know. Yeah. Um and and think about the customer education on this whole thing is like how do you how do you communicate that this is a the situation we would raise these prices and people would protest us because they would think that we're taking advantage of this situation to make extra money or oh
• 38:00 - 38:30 we we we won't we couldn't possibly make a little bit less margin so the customers got to pay that customer education journey is so difficult. Um before the US manufacturing question, you had a Q80, right? You want to run through that one? Same kind of speed. Yeah, we could run through the Q80. Um one of the key things with the Q80 uh just just uh because it's going to stand
• 38:30 - 39:00 out. We have negative margin before tariffs wi with re retail um margin added. This was a product that we developed effectively with a strategy of going through core doing pre-orders and that most of the customers who would be interested in our liquid coolers are more familiar with our brand and more comfortable with ordering directly from us. So you can see the product right off the bat is nonviable for retail, right? Yeah. Not even a loss leader. Like
• 39:00 - 39:30 nonviable, right? Okay. Got it. It's not a Costco It's not a Costco chicken. It's like 10 Costco chickens. Okay. All right. Okay. So, running through the same exercise, uh, we estimated at 2,000 a month, 24-month life cycle at 48,000 units, uh, total lifetime. We do did two mock-ups. We did, uh, we have certification for worldwide around $7,000, uh, NRE of $40,000, and a tooling charge of $32,000. Total pre-production costs
• 39:30 - 40:00 around $97,000, advertised to around $2. So, there's different tariffs that hit uh RQ80. There's the 25% section 301 uh that was set by the previous administration back in 2018 at $44.51. So, for every cooler, that's the charge. It wasn't excluded. Um so, that would be have to pay if we bring that cooler in. Now, for coolers, we put more in a container around 90 coolers per pallet and 30 pallets per container. So
• 40:00 - 40:30 per container we could bring in 2,700 units. Uh now the container charge and documentation fee, trucking fee and loading fee doesn't change at 6,500 added together. So that brings to $2.78 per unit uh freight in. So our FOB price to from the factory is 17 $178 and our freight in is $2.78. Our storage fee is 50 cents per
• 40:30 - 41:00 unit and our advertised investment pre-production was $2. So our landed cost is $227.88. And if we were to sold it to retail stores, we would be losing $20 before anything. M and you could see on the tariff um 25% section 301 there's the 10% that was added in February there's the 20% that was added in March and then during March 12th there was a 25% aluminum charge um that was added to
• 41:00 - 41:30 any product that had aluminum in it. So the tariff charge on this product after April 8th is $33. Is that am I reading that? Yeah, the tariff the tariff charge is almost the same as our MSRP. That's literally insane. Yeah. So after after so anything so we stop I immediately said stop shipping any QA to the United States. Absolutely. Even the ones that we plan to fulfill. We're about to pay $300 per
• 41:30 - 42:00 unit. And how much how much did you sell them to those customers? $320. So So that is the tariff charge. And yeah, I was going to say to emphasize that doesn't mean you're making 20 bucks, right? What about why why don't you just make it in America? It's a great question. Thank you. There are reasons. These costs are insane. Mhm. It's still cheaper than if we tried to make it in America. And now the the the costs of making in America carry
• 42:00 - 42:30 additional nonmonetary costs, organization, timing, all these types of things. I would I would love to be able to make the products that we sell in each country in the respective country. But the reality is the structuring of the global economy to manufacture goods has gone in one direction uh the entire modern era. And even just
• 42:30 - 43:00 to try to pivot outside of China to reduce the pain where there is actually already manufacturing that has been happening far more manufacturing has been happening in Thailand, in Vietnam and in India than in America. And that change is very difficult. I can't see it happening uh for all of our products inside the next 15 years. There is an incentive to just not be in China. That's the communication I'm getting
• 43:00 - 43:30 from the current administration. Um, so we're going to try to move out of China to Thailand or Vietnam, which comes with its own associated of risks. Um, as of right now, uh, the initial cost estimates of just the inefficiency of manufacturing uh, outside of China, it's an extra 30 to 40% on top of the cost. Mhm. the workers uh may not be as skilled. You may not be able to reliably
• 43:30 - 44:00 get materials, the machines may be at capacity, so you may not be able to get production space. There are all these additional costs and that's in nations that are already somewhat prepared to absorb this manufacturing excess. America is so far away from being able to take our business. It's it's not viable. It's it's like it's like telling someone to go get food in a place that won't have food in five years. Like it could have food when you till the soil
• 44:00 - 44:30 and you grow it and you you you get it ready to be able to benefit, but that you have to understand that that takes time and that takes effort. Uh a lot of the companies I would assume like you guys um don't own the factories making these things. Absolutely not. And I think that's probably a misconception too cuz it's not as easy as height takes heights factory and moves it. It's height takes its business from a factory and moves it. I can tell you that 99% of the
• 44:30 - 45:00 factories that can make computer cases in China cannot make our computer cases. To bring that into America is it's not viable. Even even to bring it in Thailand and Vietnam, it's unproven. It's not it's commodity. It's special. Yeah. Right. So, I would love to bring these products to America and if this administration can um set forth some reasonable plans and perhaps doing
• 45:00 - 45:30 it in waves so that each industry is timed to be able to get their chance because right now it's just like even the products that people currently make in America have gotten more expensive because there's so much tariff incentivization. The whole thing is just growing inflation. So making the product in America, I want to be very clear. Not only do I not see a path to do that in the next five years, inside five years, I do not expect that it will be cheaper
• 45:30 - 46:00 to make it in America if I can make it in America. And that's a big risk for me to take if I may not have any customers to be able to afford it, right? Um it's it's frustrating. I would love to do it. Yeah. Up next, Thermal Grizzly. Thermal Grizzly is a manufacturer of liquid metal, thermal paste, pads, and cooling blocks. And because it deals so much with metals, it also deals with a lot of unique export and import controls. Thermal Grizzly is run by Rowan Harton, also known as Derbau, known for his
• 46:00 - 46:30 overclocking background. This meeting includes unique views from someone based in the EU, including with manufacturing there, who also ships to the US. We recently toured Thermal Grizzlies factory near Berlin, Germany, where it's doing some of its production in its headquarters. That'll be a separate video in the next week or so. So, do do the tariffs affect you? Cuz we've been to your Germany factory. There's a video coming up on that soon. And uh you also still make stuff in China, right? Some
• 46:30 - 47:00 stuff. So, do the US tariffs affect Thermal Grizzly? Yeah, for sure. Um I think sales wise uh about 20% of our um yeah sales go to the US currently and with tariffs directly increasing the prices for the customer. I would definitely expect that the sales volume in the US would decrease. Yeah, we had also shops reaching out to ask uh asking
• 47:00 - 47:30 what we can do to help them, if we can in theory lower the prices to make up for the tariffs. We also had shops directly asking us in an order to yeah directly pay for the tariffs basically which is for us just not possible. Like for most of the products we have a quite reasonable margin somewhere between 30 and 50% typically sometimes lower sometimes higher and if we would have to let's say uh yeah make up for 25% of the
• 47:30 - 48:00 tariffs then I wouldn't be able to pay my people anymore. Like that that wouldn't make any sense for us. Like that just wouldn't work right. So at that point, what I what would you do if if the retailers are demanding Grizzly to pay for it if Grizzly says no, you know, and you hit a stalemate. I mean, what what happens? There's only so much we can do. I mean,
• 48:00 - 48:30 worst case, we will have to reject the order and then maybe a product will no longer be available in the US. That might be a consequence for us right now. is also figuring out because some products are made here in Germany, some are made for example cryosheet is made in Sweden. Then we have some paste that is made in the US. We have some paste that is made in Taiwan, some that is ma made in Japan. Uh some in China and then we have to figure out um yeah which product can we use where and how to distribute it. Some products might
• 48:30 - 49:00 eventually just no longer be available. So there's there's not much we can do about it eventually. We have some stuff that's made in Vietnam as well, but um that's yeah, mostly for accessories. So out of all those countries, do you happen to know off the top of your head are are if you ship stuff to the US right now for let's say like MicroEnter or someone to sell? Uh is all of that stuff getting hit with some kind of tariff?
• 49:00 - 49:30 I think everything to a certain degree. Uh recently, I think there was a week or two ago, we had to go through all of our products, for example, a water block and I had to weigh everything, you know, like check this is 17 g of aluminium and this is 3 g of steel because of a screw and then like list everything and then different yeah materials were hit by a different tariff depending what it's made of. And then we had to check what the origin of our aluminium is, for
• 49:30 - 50:00 example. And also not only the because we buy it from a vendor here in Germany that is making the aluminium, but then we had to figure out where is he buying the raw material for the aluminium. And then we had to like go all the way down into the supply chain and do that for basically all of our products which is a lot of work and sometimes not even possible to do because some of the suppliers they're like look we have to protect our supply chain. We just can't give you the information. Right? So sometimes that is quite difficult. So
• 50:00 - 50:30 you have to get the actual origin of the raw materials as well. Wow. Okay. Yeah. Um is that something you've had to do in the past? Never. Never in like uh 11 years of doing this. It's the first time we always had to give the the yeah the origin of the product obviously that makes sense like where is it manufactured? Um but sometimes you know I don't know I buy a silicon oil in China for example. Um but where do they buy the raw materials for making the silicon oil? they might not even give me
• 50:30 - 51:00 the information and um that's sometimes making it incredibly difficult and also in from my perspective not really in proportion to what we're doing. If if you guys sell in the in um in Europe uh do these tariffs affect you in any way? No. Okay. Like if whatever we do outside of the US uh yeah you know um the US is the US but there's also still the rest of the world. the rest of our 80%. There's the US and then there's everything else. I'm glad you put us in
• 51:00 - 51:30 the middle. That's exactly how it should be. I can do that. Yeah. Where where ultimately does the cost go? So, if you ship something to the US and somebody has to pay that, so maybe that's the retailer buying the pallet has to pay it. Whether or not you agree to compensate them, whatever. But uh is that the end of the story? Retailer pays the tariff. No, it's the
• 51:30 - 52:00 consumer that pays for it. You know, it's uh that's what people maybe don't want to hear. But in the end, um if we ship it to the company that's importing it to the US, they will have to pay for the tariff and they will have to move on or move forward this cost to the customer. There's no other way. I mean, I can't imagine because we also know what kind of margin the shop has, right? Most shops also have this a similar margin to what we have, they might have, I don't know, 20 30 40% margin. And if they have to get rid of 25% of that, it
• 52:00 - 52:30 just wouldn't make sense to to stay in operation. Um, so ultimately the the customer pays for it. There is there is no other way. Do the tariffs that the US has implemented uh affect in any way Grizzlies plans for manufacturing? I mean, do you consider them at all? Not really, to be honest. Um it's I mean I'm I'm not against oper like manufacturing in in the US that's certainly something that is interesting but the for me as a
• 52:30 - 53:00 as a business owner what is happening actually pulls me away from that because um it to me it feels like um we are in a very unstable situation. Things change on a daily basis and for any business for any operation um yeah drastic and sudden changes is the worst thing that can happen. We would need to know how far can we plan into the future like for what what happens in the next 5 years or in the next 10 years. Would it make sense to to establish a manufacturing there or not? But with things changing
• 53:00 - 53:30 daily or weekly, I think this is more off-putting for any business then it helps it it just makes things a lot worse from my perspective. Right. Uh and then last one here's some context for people. So, um, like I said, we have the separate full thing on the factory, but to get people introduced to it, uh, can you tell me, give me some information about the factories that you've brought to Germany? You know, like what was the what made you want to
• 53:30 - 54:00 do it? How many roughly how many staff do you have there? What kinds of things do you make there? you know, just kind of some background information because a lot of the the reason I ask just so you can frame it, but a lot of the companies we spoke with, most of them don't own the any of their own factories and so it's all contract and most of that's in Asia. So, Grizzly is a bit unique here. Yeah, we we saw this kind of thing happening maybe not so much with the US, but we were more afraid of what's happening with China to be fully honest.
• 54:00 - 54:30 And that's why at a certain point I think it was like five years ago roughly um we already thought about just getting a good proportion here. So we started making plans for setting up this like factory thing and um getting machines and stuff. So right now we have in this facility here we have 37 people but it's only production and um research and development and then we have another one where we do the logistics but um yeah so
• 54:30 - 55:00 we we started thinking of how can we make thermal paste here? How can we make uh liquid metal here and we split up the liquid metal for example. So we still the the normal conductor out is not made here for the majority of time. We sometimes make it here depending on what some industrial customer needs. But the maj majority of the time the normal conductor node is not made here but conductor node extreme we're making here in Germany for example. So we have two two kind of similar products and then we
• 55:00 - 55:30 can distribute them for example now we can easily ship the conduct node extreme to the US without being affected by China terrorists. But then on the other hand, we often have um Asian customers who want to use liquid metal in their notebooks for example. And then it's actually better if we have also a liquid metal that is made in China. Um so we try to to balance this off to have multiple sources of origin for multiple products. That's that's actually an interesting point. So why if uh you know I think I know the answer to this but if a company wants to source your liquid
• 55:30 - 56:00 metal to put in their product that they make elsewhere why might they prefer that you provide it from China rather than Germany? It's the same thing. It's also affected by uh import tariffs um import regulations especially because the liquid metal contains gallium which is um a rare mineral rare earth uh which means that it's also affected by additional regulations and thus often makes it very complicated to import and export. So yeah that's uh that's a
• 56:00 - 56:30 simple answer. Yeah, right. I I quickly checked with our salespeople what they think about the entire tariffs or what kind of concerns they have. And interestingly, their biggest concern is actually Amazon and the so-called Amazon buy box. I never heard about this before. I didn't even know what Amazon buy box is. I don't know what that is. Yeah. Apparently, the Amazon buy box, if you go to any item on the right side, you have add to basket or like buy now. This thing is called the buy box. Okay. And whenever there is a sudden change in
• 56:30 - 57:00 your item price, for example, it goes up 50% in price, Amazon removes the buy box and you can't buy it anymore. Oh, I've actually seen that happen. Okay. Yeah. So um that is uh interestingly the biggest concern for our sales team and and they think it will affect basically everyone because if you you know you had your item listed for a couple of months or even years then you build up you know reviews and you have a nice listing with images and videos and stuff and then suddenly the price changes because of
• 57:00 - 57:30 tariffs and then Amazon is like okay this is a too drastic price change so you can't buy it anymore. we remove the buy box and that is probably the biggest impact after all um for the tariffs happening in terms of sales. Yeah, I I guess they must do that so that I guess the the best intention would be that a listing person doesn't just kind of beat and switch a product or something. Yeah. Okay. Certainly some kind of abuse protection that you can't
• 57:30 - 58:00 promote an item and then suddenly double the price or something like that. It's also an automated mechanism, so you can't talk to anybody at Amazon and say, "Look, this is tariffs." And they're like, "Yeah." Up next, we met with Cooler Masters Kimberly Barza in Claremont, California with product director Weey Yang, who also typically works in the Claremont office, but was calling in from a trip abroad. Like many of these other people today, I've known Wei for over a decade. He's one of the reasons Cooler Master fixed its H500P after our review many years ago. As for
• 58:00 - 58:30 Kim, she handles logistics and freight issues and has the most answers for this directly. Weighs phone and audio was unfortunately problematic in the recording. So, we'll mostly defer to Kim's section here. Tim, we'll start just briefly. I mean, what's what's your role at Cooler Master? So, I'm logistics specialist. Um, essentially I handle all the inbound containers. If we need to place orders with our factory, I'll place them in our system. I'll review all the shipping documents as well that are incoming uh with customs. So that's
• 58:30 - 59:00 pretty much what I do here in regards to logistics. You have a lot to do right now. Oh yeah. Yeah. Okay. Keeping up with the news on a daily basis. Yeah. So far what the news has report uh been reporting for the reciprocal tariffs. If they have the aluminum or steel derivatives which is 25% of the material percentage then you're going to calculate based on material percentage. Okay. But if it doesn't have an aluminum or steel derivative then it would be based off the total cost of the item. So the reciprocal would be charged at the
• 59:00 - 59:30 total cost. Got it. But again, that's still up in the air. There's no official notice. So the tariffs get applied as soon as it's on board a vessel. So for example, the first reciprocal tariffs or the universal tariffs um were applied, I believe it was April 4th. So between April 4th and April 9th, those tariffs are only 10%. Anything on board data vessel after April 9th will get charged the reciprocal tariffs. So, as long as it's on the vessel after April 9th, I believe it's 12:01 EST. M, then that
• 59:30 - 60:00 will get charged the reciprocal tariffs, which right now is at 125%. Right. Okay. Um, we are you guys considering I I've seen in the news that like Razer, ASUS, car companies, like height, all these different people are uh not shipping into the US right now. Is that something that Cooler Master is considering? So before all the news hit we already ordered close to I want to say um 4,000 pallets of products and we place order
• 60:00 - 60:30 and purchase materials already. So we are at a point of no return. Does does it feel different right now from previous like from historically essentially? Yes. I mean it's pretty much 24/7 being on call with the forers contacting brokers contacting or attempting to contact customs. Right now it's a little bit difficult to get them on hold because I'm assuming they're just getting an influx of calls um just trying to get the latest news because at this moment it's pretty much just social
• 60:30 - 61:00 media or news that outlets that are coming out with the information. There's no official notice yet so it's very difficult to get anything certain. forwarders attempt to give us an official note from them, but they do like to wait for customs to officially put out a bulletin or official letter on their end to certify what tariffs are going into place that it would probably be good to define some. So you've said you mentioned forwarders, uh brokers, then of course customs or CBP. So what what are forwarders and and brokers?
• 61:00 - 61:30 What are they? So forwarders are the ones that help us import the shipments. Brokers are the ones that help us with all the legal documents when it comes to customs. So they're the ones that help us um clear customs essentially. Yeah. Right. So it's a little bit all over the place, right? We have the 25% tariffs that were executed back in 2018 when Trump was first president. Um those have a certain list of exclusions. Then we have the 10% that he executed. I believe it was February 4th. And then he did an
• 61:30 - 62:00 extra 10% March 4th. So now we're at a 45% if those the exclusions don't apply for the first tariffs imposed. And then we're moving on to the reciprocal tariffs. Okay. Um so right now I believe the reciprocal tariffs are up to 125. So all in all we're looking at about 145 with the new tariffs imposed. Yeah. If we kind of create a hypothetical situation like a $100 case or something and the case has probably some steel in
• 62:00 - 62:30 it, maybe a lot of steel, uh, and there's some various other pieces like plastics. Mhm. So, I mean, based on your understanding right now, and again for everyone watching, this stuff changes constantly. So, when this airs things might be different, but um, based on your understanding right now, how does that potential tariff break down? So right now the HTS code for case is not under the steel derivative. So it would have to be under the aluminum derivative. And there's a bunch of HTS
• 62:30 - 63:00 codes that they came out with to apply specifically for that tariff. Um so for example, if we have a $100 case, right, we break it down 50% aluminum, 50% whatever other material, the $100, there is the 20% that will get charged automatically for the entirety of the 100. Okay. Um so we're up to 120, I guess. Yes. Well, yeah, $120 or $20 for just that specific tariff. And then if you break it down 50% of the aluminum, which is $50, you tariff that 25%. So
• 63:00 - 63:30 now we're at 1250. So 20 + 1250, we're at 3250. And then if we do the 50% of the rest of the material, which is the remaining $50 of that case, that will get charged 125% reciprocal. So now we're at 62.50 for just that portion, the 125. So that entire case, the $100 case will get tariffed at I believe it's $95. Wow. Okay. So now we're paying $195 for a $100 case. So I know there have been exclusions in the
• 63:30 - 64:00 past like when a product just couldn't be made in the US. I don't know who wants to speak to this, but um do those still exist or I mean or what's the process to getting exclusions? So essentially um the government will come up with a list of exclusions. I'm not exactly sure what the why they base those exclusions on why they do it. Um but there is certain exclusions that they may apply for importers. So essentially it's like
• 64:00 - 64:30 you mentioned a product cannot be manufactured here in the US or there's enough evidence that it's difficult to manufacture here in the US as well as um providing a benefit analysis to manufacturing outside of the US. So there's certain documents that need to be provided um so such as lower labor costs, reduce overhead costs. It just really depends on what the government's looking for to be able to provide those exclusions for a certain company. Um but essentially like I mentioned earlier um
• 64:30 - 65:00 we are at a point of singularity with the reciprocal reaching at 125%. Right? So it's more or less not like if they raise the tariffs it doesn't really make a big difference anymore right it's already at 125%. He can do 200% and it's it's going to affect a lot of companies. Importers might get deterred from importing because of the 125%. If they're already deterred at 125%, if he increases anymore, it's not going to affect their decision on importing or
• 65:00 - 65:30 not importing essentially. What what would you say are sort of the real world impact? You know, what do you I mean, what do you think is going to happen? Basically, um essentially people are really going to get affected in terms of their jobs. they're going to start companies are going to start closing jobs are going to start decreasing um so essentially I think that's going to be the biggest impact because a lot of companies can't maintain their operations with the
• 65:30 - 66:00 tariffs it's it's going to affect them a lot so if they don't have that type of cash flow to be able to sustain the business during the time of the tariffs and again it's so uncertain it's going to affect a lot of people's livelihoods right um one thing I'm I'm really curious about as a thought exercise for both of you. So, is there uh this is another thing I don't have an answer to. Do you think there's anything positive that can come out of the current tariff situation? Like if we
• 66:00 - 66:30 just devil's advocate, right? like from Cooler Master's perspective at least or or maybe personally but do you guys see anything positive there if the president decide to you know accept the tariff on May 31st imagine what will happen right we will have influx of products everyone that brought in and now we have products sitting here that were forced to sell because there's no tariff then it it becomes a pure in
• 66:30 - 67:00 the pocket. Kim, what is your uh do you do you have anything you want to sort of just uh address? Like are there any misconceptions you're seeing commonly online or elsewhere or you know user comments or I mean I think the primary misconception is that tariffs are paid by the tariffing country. So the countries that get tariff not necessarily the importing country. Um, I
• 67:00 - 67:30 think that's the biggest misconception, which isn't true. So, the importer has to pay that tariff and then we have to eat that cost or give it to our consumers essentially to maintain our our business. I think that's the biggest misconception that I've seen so far with everything going on. I would definitely agree with that. Yeah. Yeah. I mean, it's the China is not paying the 10 and whatever% 25% tariff. Yeah. So, in this case, Cooler Master or whoever it would be. Anything else you guys want to add?
• 67:30 - 68:00 Uh, I just hope the tariff goes away because it it doesn't go away and it stays a lot of smaller companies going to be out of business and millions of people going to be out of business because a lot of small uh owners out there and they can't they can't afford to pay the tariff because you have to pay the tariff in advance before you can sell the product. So essentially you have to pay for the product first. pay for the tariff and then you sell the product and you have
• 68:00 - 68:30 to collect the money probably net 30 days or net 60 days later and a lot of company just can't afford to do that and we see a lot of companies being laying out people already so it's just not going to be good for the livelihood of the US employees or people that's living in the US essentially just what way said as well I just hope um there's more certainty as well and the whole tariff situation the whole back and forth news coming out one day different news coming out the next day um stops so we can have
• 68:30 - 69:00 a more I don't know how to put it more um I guess structured future with the business yeah essentially that that's my take on it stability yeah more stability all in all that makes sense okay well thank you guys we got to run over to uh I by power and cyber power so no appreciate it you stopping by thank you for joining me thank you way I would shake your hand, but we don't have the technology. So, now we'll check in with
• 69:00 - 69:30 Alex Chin from Straight Forwarding. This discussion is unique as well. Alex works as an independent freight forwarder, which means he'll have insight to how all this actually works. He's one of the people who these companies go to to hire when they have questions and challenges bringing products into the US from any country. For logistic simplicity, we met with him at Iway Powers's office, but he currently doesn't work with Iway Power and is an independent voice here. Alex, first up, what's your job and who do you
• 69:30 - 70:00 work for? So, I am a freight forwarder. I work with a company called Straight Forwarding. I've been with the company for seven years now. It's my first job out of college. Uh, what we do, we organize shipments, you know, between buyers and sellers. We organize it with the shipping carriers or the airliners and the truckers. We're not limited to just transportation. We also do like warehousing, custom clearance, and just a general consulting, you know, just for a lot of companies. Um, I think I'm in a pretty unique position because I started in 2018. That's when the first round of tariffs actually happened. The 25% that
• 70:00 - 70:30 kind of shocked the market and um, just because that happened shortly after I got hired, I just been very entrenched in like a lot of things that have to do with customs, you know, not just limited to tariffs, of course. Right. I have, this is my hardest question, of course. Do you know the tariffs? Uh, so we'll we'll choose the blanket tariff like against China for example. Do you know what that tariff is right this instant? Uh the blanket tariff. So we're just talking about general goods or we got a specific the big number. The big number. Okay. So the big number that we just had
• 70:30 - 71:00 that is official as of last night. We have 125% plus 20% plus the 25% that happened in 2018. M so that would bring your total to 170%. Assuming that your product pays 0% duties. So things like toys, uh graphics cards, computer cases, you know, those are duty-free. You know, when you bring them in, you don't have to pay anything.
• 71:00 - 71:30 But now you got to pay 170%. What um so all the manufacturers I've spoken to so far seem very confused about the specifics on the current tariffs. Why are they confused? So, I think the confusion comes with two things. Okay. Number one, the effective date of when things happen. Cuz I think yesterday or the day before, I think it's like April 8th, April 9th, he said, "We're doing 125% starting today." Actually, that's not the case.
• 71:30 - 72:00 Um, when Donald Trump does say something, it blasts the headlines. It's totally fine. But what I wait for is the notice and the specified instructions from CBP that gets sent out pretty quickly afterwards and they'll say, "Okay, the 125 does or 125% does apply, but you can be exempt if number one, your shipment left the port, the final
• 72:00 - 72:30 port of loading before like April 9th and is going to arrive into the US before May 22th. seven. So if you have those two conditions, for example, and your your stuff is already on the water, then it would be the most recent previous tariff, I guess, the most um recent, the 125. If you got on the boat and it left, let's say, China, for example, right? It left China on the 9th and it's going to get here in two weeks. So, it's going to get here on, let's say, like the 25th or something, right? You're golden. I know there's I've heard
• 72:30 - 73:00 talk of there's special tariffs on steel, on aluminum, or whatever it may be. uh if there's a tariff on an item where maybe it's something where this larger blanket number applies dayto-day 125 170 104% whatever right um if that item is let's say 50% steel or aluminum and 50% plastic you know how does that sort of reconcile or calculate yeah so actually we got the final instructions from CBP this morning so I'm glad you asked this question so
• 73:00 - 73:30 let's just assume that you have a computer case right half plastic half aluminum So 50% of that, let's say the the computer case itself is worth um $100, right? That's your entered value. So $50 of that um computer case will be taxed that 170%. Okay. The other half will be taxed uh it'll be 70 excuse me yeah it'll be 70%. Mhm. Cuz steel and aluminum tariff if you're if your
• 73:30 - 74:00 product is affected by steel and aluminum tariffs, you are exempt from that 125. Okay. Yeah. Does that make sense? No. But I mean your explanation does. Do you think there's a positive? Is there a positive to way the tariffs are being handled right now? It's not just like we're not talking just tariffs in general. Yeah. Right. This I guess specifically tariffs the way they're being applied and managed. Yeah. you know, in the last couple months. I think the positive, whether you agree with the
• 74:00 - 74:30 rhetoric about bringing back manufacturing to America is true or not, I think that's what the tariffs are kind of gearing towards cuz it's not just steel and aluminum tariffs, automobile tariffs, you know, auto parts that are exempt from the 125%. A lot of raw materials, metals, you know, ingots, pharmaceutical stuff, you know, chemicals, chipsets, semiconductors, those are actually all exempt from the tariffs. Okay? like like very raw
• 74:30 - 75:00 materials where it's like it makes me believe that they're trying to pave the way to bring back manufacturing to America, but it's not like manufacturing chairs, you know, tables, you know, the the cheap Chinese goods that we think about. I think we're trying to move to a place where we're we want to bring back the manufacturing for like robotics, high-tech manufacturing. That's why all those raw materials are all like, you know, duty-free now or they don't they're not affected by the tariffs because you want to make it as cost-
• 75:00 - 75:30 effective to set those things up as quickly as possible. And I think for him, Donald Trump is moving very fast because he knows he has another election cycle in two years. We we'll call it like has it been a half a year yet? Yeah. One year and nine months. Okay. So, you know, like a year and nine months. He's a year and nine months to make a lot of things happen. And I think he's very motivated to try to do those things. Whether you agree with it or not, you know, um this is the direction he's moving. And I don't know if um
• 75:30 - 76:00 Congress or the Senate is going to stop him. At this rate, it doesn't seem like it. Maybe in two years we'll have a different conversation. But I do believe that he is trying to set up the manufacturing to be brought back to America, but high-tech stuff for like robotics, you know, AI, you know, maybe we want to try making our own chipsets in the US again. I'm not sure. But that's the only positive I could really see just by looking at everything. Sure. What happens if a manufacturer hits a point
• 76:00 - 76:30 where they the items ship and with the current tariffs they say this is actually no longer worth even bringing to the country. It's not viable to have it to like even bring it in anymore. Right. Right. So if you're let's just say it's it's in the middle of the Pacific right now. Yeah. What are your different options? Um I would recommend that we bring we ship that container back. We don't even let it like you know get out of the the port or anything. Just export it back to your manufacturer. talk to your manufacturer and say, "Hey, look, I
• 76:30 - 77:00 already paid for this. That's why it's on the boat on, you know, halfway here. I paid for this, but you know what situation is going on right now? You know that like this is going to kill me if you know, like let's just say like a $30 million container. You really think that someone has another 30 $35 million just to put up front to bring it in before you even sell it? It doesn't, you can't operate a business like that." The second option I would um you know recommend it's called a a foreign trade zone. So this is like a third-party
• 77:00 - 77:30 logistics warehouse. It operates just like any other warehouse, but they're special because you don't actually have to clear customs to bring your product into the state and into their facility. And you pay duties as you start withdrawing the units. Oh, interesting. Out of the warehouse. It's like a bank, I guess. It's almost like, you know, we're going to have it physically in the US, but to customs, it hasn't officially entered. It's a foreign it's a foreign area. Okay. Kind of like um like you
• 77:30 - 78:00 know terminal one at like the airport or something you know like once you get to that point you got all these duty-free stores whatever you know all these like foreigners just like all in the same place you know it's kind of like that vibe where so basically you store your $30 million of GPUs in this place cuz you you don't have another $30 million to with to import it all. Yeah. You pull your whatever pallet at a time. One pallet at a time. You pay the duties for that pallet. That single pallet. What what is there's got to be a catch or a
• 78:00 - 78:30 cost. Yeah, those those warehouses are extremely expensive. Okay. They are like their normal rate is about two to three times more than a normal like third party logistics warehouse that you could just find, you know, anywhere in like Southern California. They're really expensive, but it's the fact that they're certified by CBP that gives them the ability to do that. And um you know I bring up GPUs, you know, $30 million a lot because the type of clients that they cater to are like billion-dollar
• 78:30 - 79:00 corporations, HP Pavilion, you know, Asus, you know, all like, you know, the laptop companies like Toshiba, you know, they love those guys because that's what they do. They bring their their laptops in, they can't pay for it yet or they don't want to pay for it yet just because of the cash flow issue. So they'll just slowly pay for it, you know? Right. Um what about so this kind of the FTZ concept what's to stop uh and I think the answer is fraud. What's to stop a company from
• 79:00 - 79:30 saying uh you know what just take the thing from China and ship it to the Philippines and then take all the made in China stickers off and put made in the Philippines and then ship it to Los Angeles. Like I mean what's to stop them from doing that? Um if someone's very motivated nothing sure they could go ahead and do that. when you're doing something like this, you are, you know, you're taking a risk. So, if CBP were to catch you to do this, you know, they will just say, "Hey, that's not from the
• 79:30 - 80:00 Philippines. We know your supply chain. Your stuff, you know, for this, let's just say for the last 5 years, you've been bringing things in from China, right? All of a sudden, you have one thing, the same exact product coming in from Philippines and it looks the same." Yeah. It looks the same. Everything's the same. They're going to be suspicious. They're going to flag you. They're going to take your container, bring it to a site, open it up, and exam it, and make sure that all the contents is as you reported it. And if you they
• 80:00 - 80:30 don't think you reported it correctly, they'll go ahead and just probably find you. And then you're going to have to pay the duties that's actually, you know, right, that's actually supposed to be paid. And if they don't catch you, Yeah. If they don't catch you, they could always go back. Mhm. you know, in their system, they could always just go back and be like, "Hey, you know, I wonder what this company's up to. Like, why are they bringing everything in from the Philippines all of a sudden?" They could just go back, backtrack everything. Hey, um, I think, um, you should be paying this amount of duties. They'll send you a bill. Like, I think
• 80:30 - 81:00 you should be paying this amount of duties. Well, they go back through your prior imports. Oh [ __ ] Okay. And then the caveat on top is that they will actually, in my opinion, this is not official. Uh-huh. They'll flag your company and every single container you have coming in, you're going to get exam. And each exam minimum is about like 700 to $1,000 per container. What what kind of response are you seeing from your clients right now? I mean, are people panicking or what? They Yes. Okay. So, a lot of panic, a lot of um a
• 81:00 - 81:30 lot of me just trying to calm people down and just saying like, "Hey, look, I'm receiving the news the same time as you. I will I will wait for the official notice from customs to come in first and then afterwards we'll deal with it. But since he announced that all the other countries will only get taxed 10% now, I suspect that there might be a shipping frenzy just because people who are not in China might want to get their stuff out. Okay, because they're going to save a bunch. If
• 81:30 - 82:00 if let's say tomorrow uh let's say you you have a client whose shipment arrives today, they pay the highest possible tariff from China. Tomorrow the White House comes out and says JK lol and cancels all for it. Yeah. If you're the guy who just paid the 170%. It feels feels bad. Can you do anything? you know. Yeah. So, I would um tell if that had happened to one of my client shipments straight up, I would uh
• 82:00 - 82:30 start a process called a post summary correction. Yeah. Which is um it's there because like sometimes, you know, like when you receive like cargo from overseas, sometimes the documents don't match what's physically there. Maybe you're missing like five to 10 pieces, but you paid duties on those extra five to 10 pieces. It's not right. You shouldn't pay for something you don't have, right? So that's why that is in place. So you could correct, you know, your end your your duty invoice. So I would encourage all my clients to do
• 82:30 - 83:00 that and revise it. So now the invoice date has been adjusted and those tariffs in theory and in concept should not apply anymore because now it's a new day and this is a a legal avenue. Yes. In the second week of March, I had one of my client shipments um come in and this was right before the 20% happened. We sent him the invoice, the duty invoice to confirm and like pay it off
• 83:00 - 83:30 on um you know sometime in February, right? And he waited like a week, right? And then after that week the 20% became effective. So when we try to submit you know our duty invoice without the 20% it was rejected right not the original invoice date it was before that so okay yeah so that's what I think like and he ended up having to pay an extra 20% by the way just because of that so that's why I think the reverse would happen too
• 83:30 - 84:00 that makes sense um last one I mean do you how do you think the the tariffs as they're being enacted now what do you think the impact is on US jobs or uh I mean yeah I guess just employment prospects if any it's hard to say because um I I grew I'm born and raised in LA so to be honest there's really not that much manufacturing in LA service-based businesses you know um importing is a huge thing you know Port
• 84:00 - 84:30 of Long Beach is the largest um I guess it's the busiest port for Asia trade so I'm not I could say that these tariffs will negative effect negatively affect companies within LA for sure just because like naturally there's going to be less shipments less shipments in my industry means that you know less people picking cargo up now like your shipping businesses might not need as much people you know and that's where the layoffs start happening but like you know if
• 84:30 - 85:00 we're talking like you know somewhere in like let's say Michigan right those auto tariffs maybe it really did help them and you know now like Chevy GM M um and Dodge, Chrysler, you know, they all have like a competitive advantage now. So now those people can keep their jobs. You know, I'm not sure exactly what those people's perspectives are, but I could imagine, you know, if you feel like your job is secured for at least another year and you're unionized, you you're pretty happy, right? Right. Yeah. The next
• 85:00 - 85:30 individual we met with is Lewis Rossman, the outspoken right to repair activist, YouTuber, and founder of Rossman Repair Group. Rosman Repair is an independent electronics repair shop that moved from New York to Austin, Texas. It also sells hot air stations for soldering and for repair technicians. Lewis imports these stations to be sold through his online store and has also dealt with tariffs uncertainty. As one separate heads up for this discussion, Lewis uses very colorful language when he talks just in
• 85:30 - 86:00 general. And uh we're not going to censor it. We're not going to mute it. So just be aware of that. Have the tariffs impacted your fish food? Not yet. Although I think they may have to start eating the flies from the top of the pond. They are going to have to I'm going to notice them eating the flies much quicker because they're going to be much hungrier. Let's see if I can get the fish. Have they affected anything in your uh nonwork life that you know of? No, I haven't really gone buying stuff yet. It's going to uh all that stuff is going
• 86:00 - 86:30 to happen 3 to six months from now. Yeah, that makes sense. I had I had stock of these already. So, it's not like it already happened and this is an order that I already had placed. So, it's not going to affect this one. But the next one is where it goes. Okay. So, where do you even begin with beginning with tariffs? I think the first thing to go over is that there's this started when I moved to uh Texas from New York. A lot of people would say you went there to save on taxes. Greedy business owner goes there to save on taxes. And that's not how any of this works. Companies are okay with taxes and sometimes they're even okay with high taxes. This goes against the narrative that this is like why people move, but it's not about
• 86:30 - 87:00 that. It's about the stability. I can deal with a bad regulatory environment if it's stable. If New York is going to charge this much in taxes or it's going to be this much extra because my employees have to pay high rent, I can put that into my prices and I'm good. What I can't deal with is an unstable regulatory environment, an unstable tax environment. Even a bad one, is better than an unstable one that's occasionally good. I I'm okay with paying these taxes or increased taxes, but it's when you say we're not really sure how to interpret this law, so give us 1.2 million. That's when I'm out. And with this, if I see a tariff of 20 or 40% one
• 87:00 - 87:30 week, 50 to 60 a day later, then I see it 120%. Then I see, well, electronics are maybe exempt and in Bloomberg and then I see on Truth Social, no, that's not actually happening. I have no idea what that means. So, I can't make decisions because it's not about it being a high tariff. It's about not having a clue what's going on. What uh let's give some background. What are these? These are hot air stations. I use a hot air station when I'm performing repairs that allows me to desolder chips off of the motherboard. And the if you want to buy one in America, I believe the only company you can get it from,
• 87:30 - 88:00 correct me if I'm wrong, is Pace. It's somewhere between $1,600 to $1,800. And when I last visited one of the vendors, it says nozzles are not included. So like this, I can sell and be in business for I can sell this for $200. I am the cheapest in the continental United States selling it. We have the best warranty. It's two years, and even if it goes wrong outside of that, we'll replace it for you. And it allows people to get into this job if they where they wouldn't afford to. Have you seen a difference yet in what you're paying at the port when they come in? Well, I'm somebody else receives it and then ships it to me. So, I would not be responsible
• 88:00 - 88:30 for the tariff because I'm technically not the recipient. But the person who does receive it can't tell me what it would cost the next time I place an order. So, I could place an order and then he would say, "Well, we cannot ship you this order unless you pay us again." So, for instance, for one of these orders that I was receiving, they were not sure how the rule worked. Does it work based on the date of the invoice? Does it work based on the wire transfer, the date of the wire transfer? Does it work based on when the ship left China? Does it work based on when the ship arrives here? And there are so many things that can change in that time period. So like if I have this here, I can figure out will somebody pay 400 for
• 88:30 - 89:00 this, right? But I am not going to risk I'm not going to make a 20 or 30 or $40,000 investment on a bunch of stuff that I can't actually sell. I need to figure that out. And I can't figure that out when the rules are changing all the time. What um to I guess bringing it to basics, who is it who do you think ultimately pays the tariffs? Because this is a misconception I've seen a lot too, the customer. So if I were to steal man Trump's argument when he says that China would pay the tariff to give the devil their due, his idea is that when
• 89:00 - 89:30 it costs me an additional $100 to import something, what I'm going to do is I'm going to go to the Chinese vendor and say, "You need to lower your price 100 because I'm paying more." That doesn't work. I can't walk up to somebody and say like I can't buy something from you and say I live in New York and I pay 10% more tax than you so you have to give me a 10% discount. You're going to tell me to go [ __ ] myself and rightfully so. That that's a you that's a me problem. That's not a you problem. So with Trump I imagine I don't think he's as stupid the way people are saying where he doesn't know how a tariff works. I think
• 89:30 - 90:00 he he's doing this roundabout thing where what he's saying is you're a crappy salesperson and business person for not being able to get them to lower their prices. And I understand that argument. It I I don't agree with that argument because the person in China is going to say this has higher performance than the pay station that costs $816 $1,800. It has bent nozzles, which that doesn't come with. It has better performance. It heats up faster. Your alternative is 1,600. So if you want us to lower our price because your president has done this, like garle my
• 90:00 - 90:30 balls. They're not they know. They're never going to lower their price. So the way this works is when I import it and it cost me more money, I'm going to charge you more money because I don't want to lose money. They know that when Trump started talking about this, he has been very consistent. He's been talking about the at least the craziness of the politics. He's been consistent since the late ' 80s. In the late ' 80s, he was talking about how Japan and VCRs and everything else, but back then a VCR from Japan versus a VCR in America, we're talking about a price difference of like 10 or 30%. There was some if so you could you could close the gap. You
• 90:30 - 91:00 could close the gap with a tariff. Now, you could argue whether that's the right thing to do or not. I personally wouldn't do it, but you there's an argument to be made both ways here. When this I can sell for $200 and the other unit is $1,600 to $1,800. Even a 100% tariff, it's not going to change anybody's behavior. Now, let's say it did change behavior. It takes anywhere from 2 to 3 years to even start tooling a lot of the factories in the United States to get this done. And two to three years from now, the tariff may not be there. So you're going to do all this onshuring and you're going to build all this infrastructure to try and do things
• 91:00 - 91:30 here for a policy that may actually not even be here several years from now. So I don't think this is the right way to get things on. I think it's a national sales tax. I mean to you, if I understand you right, it sounds like it's the instability that's the larger of the concerns. Is that accurate? It's instability because even if I knew it was 100% it was going to stay there, I could test. I could put I could make this product three or four or $500 or something else and I could see if people will still buy it. I could figure that out. But I don't even know how to work that if I don't know what the rule is
• 91:30 - 92:00 going to be because now I'm changing the the goalposts. There was this one story I went over a few months ago where there was this thermostat and if you wanted to be able to control it the way you used to, they did a test on their users and the test they did was they put everything behind a payw wall but it was a fake payw wall because when you click the submit it's like ah gotcha you don't actually have to pay. They just wanted to see if you'd be willing to pay. They were [ __ ] with you. It was an experiment. I'm not saying that you should do that. You should. But I am being put in a situation where I would have to do that. The difference is at least with them they had the prices that
• 92:00 - 92:30 they were going to be charging people. So, the items for the test were already laid out. I don't even know what they are. Like, where do I test at 250, 300, 350, 400? And also, when I'm buying this, in order to get these at a fair price, I am buying two to 400 at a time. So, it's not even if I was buying 10 or 20 at a time, whatever, small loss. I can't gamble with $30 to $60,000. I mean, I can make one or two gamles like that, maybe one that goes bad. If I make two or three gamles like that that go bad, everybody here's out of business. I'm not paying people anymore. So, I
• 92:30 - 93:00 can't afford the risk. So for me, it's it's it's not even about increasing costs on my customers. I don't know if they're willing to pay. And for me, it's not worth the risk. So I have to say, I'm going to lose this part of my business and profit. Screw this. It's not worth it. Which means that you don't get to buy this. So have fun buying the the pace, right? Can you find a positive in how the tariff situation is being handled? If I were to absolutely steel men this, I would say that there's probably, and I'm I'm reaching hard here. It's sure a positive intention even if Z really
• 93:00 - 93:30 needs to read basic economics or some any economics book at all. A positive intention or the desire to scare somebody in another country so that they do something differently than they're doing now. But even then, I don't like I don't care if another country taxes its citizens. That's not my business. You guys do you. We do us. I don't want to be taxed at a higher rate because another country is deciding to tax their citizens. If they decide to do that then like that's on them right I can't I think the entire and again it's not about whether it is a good framework a
• 93:30 - 94:00 good taxation or it's about whether it's consistent cons the lack of consistency the way it's rolled out with no consistency with it going up and down and here this is exempt but actually on truth social it's not exempt I no I I can't find a single positive in it is each of these one product I guess each of these has four in the box four so right now I have approximately I had of 50 that I had in stock before and now I have another 236 over here if I counted right. Uh well the hold on this case holding on to these is a good thing
• 94:00 - 94:30 because when I tell people that you should just look at the news and if you want to buy this make your decisions accordingly because I'm not I'm not going to be selling this anymore. I will sell a lot more. So but once these run out I'm not getting more. So I have an invoice to buy another 350 of these and they asked why I haven't paid yet. It's like I don't well is it going to cost double when when they arrive or I have to be able to get them to tell me since they're the receiver if I pay if I wire you this money up front. Can you guarantee me that that is what you will sell it to me for even if the tariff
• 94:30 - 95:00 plans change? And can they I don't Well, I'm not going to trust you with that. Again, this is I if I'm I'm not going to do that with 30 or 50 or $70,000 because if that if I make one mistake there, I'm screwed with a with like most small business owners can't afford that. You lose 30 or 60K once, you're done. Uh, so this is that's not something that I'm going to risk. So I'm not buying more of these. Now, if the tariff plans change, and this is where the the the issues really roll out 3 to nine months from now, this is the thing that people have to see. It's not just now is let's say that this is all resolved in two weeks. Well, that for three or four weeks, I
• 95:00 - 95:30 did not place an order that was going to place, which means when I run out of these now, I'm not going to have anything to sell for two or three months. So what does that mean? Everybody who does have stock ups their prices because of supply and demand or you don't have that product. So even if you don't see prices go up now the two to four to 6 weeks where everybody is saying I'm not doing business until I figure out what's going on means that things are not being ordered things are shutting down and during co like a lot of things that were going on with the economy it was this factory is closed this oil refinery is closed and so on and so forth and you didn't really see
• 95:30 - 96:00 the effects of it until three or six or nine months down the line when it's like everything is more expensive or I can't buy this or I can't get a chip for a car and I think you're going to see the same thing happen here because nobody when they see 20% then 120 me maybe exempt never mind when they see that it's like I'm not buying anything right now but you're going to see the effect of that 3 to six or nine months from now when the stock runs out. So that's that's really interesting I think cuz uh I'll I'll pitch you some of the comments I've seen online and we can talk about you telling me you want to raise my blood pressure
• 96:00 - 96:30 to measure my watch get tracking. All right. Yeah, let's get it running. That's good. Yeah. Uh no. So, one of them I would say one of the common ones is um uh companies are going to use this as a smoke screen to permanently raise prices. True, not true. It's very possible, but I think there's also a natural human inclination to do this. So, if I haven't eaten in two or three days and then I finally eat, when I do finally eat, I'm probably going to eat like a pig. But more importantly, your
• 96:30 - 97:00 body's going to hold on to that. It may not be healthy for you. You're going to wind up with a bit more of a gut. it's not going to go to the muscles and wear it, but you're going to want to hold on to that. So, if I've had this traumatic experience of I had to raise my prices 100% because some dude decided to have a war on Truth Social or something, then now I'm going to be worried. Is that going to happen again? I'm going to have that anxiety in the back of my head. So, now again, 90% of it is going to be greed, just to be clear. But there's going to be that little 10% that says I'm going to hold on to it because I had that shock. Because I had that shock, I'm not comfortable unless I have more
• 97:00 - 97:30 profit. So, when I was getting this shipment for two or four days, I was [ __ ] bricks, wondering, am I going to have to spend 25 or 30 or $40,000 extra to receive the [ __ ] that I already paid for? That's a heart attack. And when I have that heart attack, my brain is going to realize the amount of money that I was making before is not enough anymore. Because when I told you that that 30 or 50 or $60,000 mistake could end me as a business, what that tells me is I need to be making more profit. And then once I actually start making more profit, why am I going to go back to where I was before? because that reminded me, this event reminded me that my business is one or two 30 to $60,000
• 97:30 - 98:00 mistakes away from not existing and me going to work at an Apple store, which is probably not going to happen. But so once I have that that stress or that trauma of it, I'm probably not going to go back. And then obviously the rest of it is the greed, which is like Yeah, of course. Like if I could make more money off somebody, why why wouldn't Corsair charge more money for a product that has poor cooling or whatever? Yeah. Yeah. One of the other comments I've seen is, "Well, all this would be solved if you would just make it in the US. Just bring it back to the US. Well, they are. But they are. You can buy a pace for
• 98:00 - 98:30 $16,800. Would you like to buy one? Oh, you don't. You're the one who [ __ ] every time I raise the price by $20. Well, [ __ ] you. I mean, seriously, every single one of the individual You can. You can buy it, but you choose not to. That was the most New York [ __ ] you I've ever seen. You choose not to. The same [ __ ] that says that when they walk into a repair shop that's $65 and the guy down the street working in a [ __ ] Western Union or a juice place says it's $55 is going to [ __ ] that you charge $10 more. Every single person that says that [ __ ] I guarantee you're going to see all the wars in the
• 98:30 - 99:00 comments. Of course I pay extra. No, you [ __ ] wouldn't. I know because I've spoken to people like this for 15 years. If if somebody has to pay $16 to $1,800 for a tool that is less effective, not a bad tool, I'd use it, but less effective than a tool that's $200 there, that is going to be reflected in their prices. And it's not just one tool. We're talking about the ability for anybody to even get started here. I mean, one of the main primary per people that was a protege of mine. He started doing this when he was 16 years old. Now, if you take every single tool in that chain and you multiply the cost by six to 15
• 99:00 - 99:30 times, do you think a 16-year-old kid that's making minimum wage working at Cava or something is going to be able to actually get started doing this? No way. If if you take the startup cost of building a business like this, if you take that in initial investment from 2,000 and you make it 20,000 for all these different little tools and things you need, you have now made it so that only a small number of people will be able to do that particular job. And once you have a small number of people that do the job, now they can raise the price because there's less competition. You're making it more and more difficult for people to break into this, which ironically is one of the reasons that you see China making all this stuff to
• 99:30 - 100:00 begin with. I mean, there are kids in China that are taking iPhone 7s in the street and putting headphone jacks in them like what you see with Strange Parts. You don't see that being done here. And if you want to take the cost of tools like this and you want to raise them by eight or 20x, you're going to you're going to see even less of that here than you get right now. What do you think is next or where do you think this goes right now? I think more and more people like me are going to say, "I do not want to have a heart attack wondering if I have to pay 20 to $50,000 more because of a post on Truth Social." I think people like me that read like, I don't know, Bloomberg one day, a news
• 100:00 - 100:30 thing saying, "Tarrorists postponed. Here's the source." And then, oh, Trump saying, "No, never mind. It's back. I'm not buying this again." Do I Do I want to wire 30 or $60,000 to a to somebody to buy this? What What would you need to feel like you can buy it again? I would like to see well firstly you're not supposed to be able to place a a tariff or a tax without the approval of Congress. The only way that this is being done is because they're claiming that there is some emergency or wartime condition. I would want to see that slapped down by the judiciary so that
• 100:30 - 101:00 you're not allowed to do that. If you do want to do a tariff, it's got to go through Congress. It's got to go through Senate. It's got to go through the normal process. We can't be doing this [ __ ] like an emerging like an emerging market. I want to see that if something like this is going to happen, it's going to be a specific process. It's not going to be immediate. It's not going to be something where there's no checks on it whatsoever. And yeah, I want safety and security. That's what I want, right? Checks and balances. Are people gonna look at this and think, "Oh, it's just a bunch of companies complaining about they're not making as much money as they were. Woe is me." You know, like boohoo. Take it out of your margin. Um, and I
• 101:00 - 101:30 haven't really figured out how to try and address that yet. Because if you see a bunch of executives or business owners or whatever product managers complaining about they're making less money than they used to as a consumer I mean does you know does it come across as like pity seeking you know like how do you I'm trying to figure out how to reconcile for people who don't have the perspective that you would have or Corsair or whatever would have
• 101:30 - 102:00 uh to to see that the impact has a wider reaching effect than just business owner makes less money. Well, I think that it's an important perspective because especially when you see the these people that run these meat packing companies or anything else where the CEO is making $2 to $10 million a year and he's got a bunch of people that barely make $7 an hour if even that are doing the work. It's like poor you. You have to pay somebody a real wage, you know, like crying a [ __ ] river. I completely understand that perspective here. I mean, every like the lowest paid technician that works here is getting
• 102:00 - 102:30 over $30 an hour and the the high, you know, the people that are not at the absolute bottom level are making considerably more than that. And I the bonuses that I pay people do come out of stuff like this. You know, I make less money at my own company than my best paid employee. I I don't expect people like I don't expect people to believe any of this [ __ ] if if I'm going to be able to pay people bonuses or anything else. It's it's coming out of the profit that I make from selling items like this. So, yeah, you could say, you know, I'm complaining because I'm not making money. But for me, it's not personally it's not about whether or not I I lose out on money. I I I don't make money.
• 102:30 - 103:00 It's about fear of loss. Like that's what gets me more. It's not I I've made a living for myself before I ever sold a hot air station. Rossman Repair Group existed, had over eight employees before I sold a Quake or an Aten or anything else. I'll still be here. It's just where I won't be here is if I make a decision to wire like five or six figures to somebody else and then I realize, oh, that's double later. It's really the fear of loss that gets me more than the other. And I mean, if you're talking about a lot of these PC manufacturers, I get it. You know, like what does the CEO of Corsair make? I
• 103:00 - 103:30 mean, like, what is it? They're publicly traded. Look it up. They're publicly traded enough that they could give me a case with a working [ __ ] SATA cable. But the point like yeah, like if if it's like the end, you know, the the CEO of Nvidia like Crimea [ __ ] I I completely understand that. But I guess it depends on at what point do at what point do you identify with the person who is having an issue? Like Walmart having an issue? Nobody gives a [ __ ] Amazon having an issue, nobody gives a [ __ ] Corsair, anybody half of the PC manufacturers, frankly, like do do people really care about if something happens to ASUS or Gigabyte? No, they
• 103:30 - 104:00 don't. Asus, especially if they watch your channel, I get it. Is it when it affects a small company that's 100 people? Is it when it affects the corner shop that has five people? Like at what point is it something where like if somebody has five employees who is your neighbor who you've been to for going to for 10 or 20 years for whatever you get, raises their prices and says, you know, it's harder for us to feed to feed our family and pay our employees. At what point would it be something where you would say, "Yeah, okay, maybe you got a point, right?" Because yeah, if you're talking to Corsair or Asus, like, [ __ ] them. I mean, I I wouldn't I don't have sympathy for them either. I definitely
• 104:00 - 104:30 don't have sympathy for Walmart or when you see a lot of the problems when you see these economists go on the news talking about this or they're people that are usually several zeros higher in the net worth than most of your viewers. So, I would suggest talk to people that are being affected that are in the zeros range of the net worth of the people that are watching your channel. What um what type of business do you think is the most affected or business owner by the tariffs and the the roll out in the beginning is going to be anybody who is directly receiving something and after a
• 104:30 - 105:00 time it's going to be whoever is receiving the the items downstream. So for instance, let's say that there is a school who says that we want to buy 40 of these. You know, you're not affected immediately, but when you decide we're building this new maker space over here and we like to buy 40 and I say, "Hey, remember I used to buy for two?" You know, you could pay four, right? They're affected later. So small businesses are going to be affected by it, but it's that it's that time that it takes because even I am not affected just yet because these arrived and this was already on on the boat and everything prior. There's a latency. Yeah, there's
• 105:00 - 105:30 a latency. So I'm now if I were stupid enough to order these again, which I'm not for a while. If I was stupid enough to do that next order, it takes two months for that boat to get here. So first I have to manufacture, which is a few weeks, and then two months for this. So that so that would be I should be able to do math better than this. Something like eight eight weeks or so. It'll be the end of July after manufacturing is done for me to get it. And you'd see it in July. So that you're not really feeling the policy right now. Same thing with co you don't feel it until everybody starts going outside again. And then when people are are are going out and doing things again, then
• 105:30 - 106:00 then you see like inflation uh going nuts. But in the first one or two months, it's not like everything went up like crazy. I think it hurts everybody really cuz let's say let's like [ __ ] all of this. Let's say I'm not selling any of this. Let's say I don't do any of this. Yeah. What about the things that I buy for people? Like if I have to buy all the different tools that I buy for the people over here or the parts that I get for people that are here. Now, there are certain elements of my business that are not going to be affected for data recovery. If I already have all my tools and I am buying donor drives off of eBay that were, you know, in somebody's garage somewhere out of broken machines,
• 106:00 - 106:30 that's not going to be affected. But all the other things are the parts that I have to buy. When people say, you know, you're using cheap Chinese [ __ ] and that's why, okay, what are you what are what are you watching this video on? Are you really, I mean, I when I'm buying a part from China to fix somebody's device, it is because that device was made there, right? And when I when I'm buying a keyboard for this particular type of laptop or I'm buying this particular chip, it that's coming from there. It's not like I'm buying this to fix my own [ __ ] I'm buying this to fix what you have brought me. So when somebody says you're buy, you know, you're complaining about tariffs because
• 106:30 - 107:00 you're buying all this cheap Chinese crap. Where the [ __ ] do you think it's going into these parts are going into your devices that you chose to buy? Do you have any major misconceptions you've seen you want to address? I think the main thing is when people say that the prime it's about the money. Mhm. And like same thing with with when I moved from New York to here. People I make less money here than I did when I lived in New York City. But it's I I came here because I there at least if I know what the regulatory and the tax framework is, I can stop losing my hair. With this, it's not even about the money. Because
• 107:00 - 107:30 if they said there's a flat 50% tariff and that's what it's going to be and Congress approved it and I know that if they wanted to change it, Congress got to change it. You got to get all these people to agree and not one person, then I'd live with it. I would I would buy another set of these. I would I would raise the price. I'd see if people still buy and then I would adjust my order accordingly. It's the lack of knowing what's going on. It's not a tariff. You can you can lead you can live with high taxation. You can live with high tariffs. All these things can be worked out even if it goes against my personal economic. I'm more the Thomas's basic
• 107:30 - 108:00 economics. I would I would subscribe to that more than this. But even if I disagree with what you're doing as a business owner, I could accept it and work within it if there was a framework of rules that I knew. It's not about the fact that I'm losing money. It's about the fact that I cannot do business in this environment because I would lose infinitely more hair doing this than I was even dealing with New York. Right? So have Congress go through create tariffs. You can't create an emergency that doesn't exist or a war that any of this type of stuff and then use that as a false pretense to be able to write
• 108:00 - 108:30 tariffs. Like follow the Constitution. Follow the law. I don't fair. I mean honestly no like if it's I don't if it's New York City that is [ __ ] me over with I don't care if it is a Republican le presidency or a Democrats if you are applying laws inconsistency and you're not allowing me to feel secure in how I do business I will call it I don't care it's like I'm not going to defend one team for it following our meetings in Southern California earlier in the trip before we met with Lewis we had driven north from LA to San Francisco and then
• 108:30 - 109:00 hopped over to Fremont on our big road trip to meet with Corsair Components founder and CEO Andy Paul. Getting to the tariff stuff with that background. So, in the 30 or so years you've been doing this, taxes and tariffs, I'm sure, have gone up and down and have been a topic. Uh, is this situation unique the last couple weeks? Yeah. So, unique for for many reasons, I'd say. Um there's been small tariffs over the years put on certain things when you know the
• 109:00 - 109:30 government decides it's sort of a strategic move over some long period of time to try and protect an industry. Um but yeah this is very different and I think the the uncertainty of what's going to happen next week um is what's causing all the markets to be very jittery. Yeah. In terms of the bigger picture of of where to put manufacturing I mean that's a multi-year issue. Um and so you know that's that's very difficult to plan you know whether you should try
• 109:30 - 110:00 and make products in China or Vietnam or Thailand or Mexico how would you know what to do so and and once you know and there's some certainty that might roll out for a couple of years then you can start making plans tariffs are import taxes um and that means that when you import products from wherever you're buying them so most uh then you pay tariffs at the the border and So um you know a 5% tariff a company might choose to absorb that um but if
• 110:00 - 110:30 you look at the whole chain of get making something like a power supply from from the start to the finish when it gets into consumer's hands there's pretty thin margins all the way along. So any tariff that starts to get more than 10 or 15% has to go into consumer price increases. So I think you know what everyone's starting to realize is that uh tariffs are essentially a federal sales tax. So if you think about you know most of the most of the world has VAT which consumers pay when they buy stuff and one country United States with
• 110:30 - 111:00 all these states sales taxes typically going into the states the federal government doesn't get any of it. Um tariffs are essentially the federal government collecting sales tax. That's the way it actually ends up working. Um do you know this is maybe my hardest question. Do you know right now at that's an Eastern time 9:00 a.m. on April 14th. Uh do you know what the tariffs are right now in terms of the there's multiple categories of course, but if we start with the sort of the big number, the general tariff on China. So
• 111:00 - 111:30 as we have well we don't make a lot of stuff in in China, we should say. I mean we've got a big factory in uh in Taiwan um that mostly makes um it was designed to make memory modules. So most of our memory comes from there. That's currently not tariff. that's been exempted uh as part of the Friday's announcement. So most of the those products now coming out of China, everybody has to pay the 20%. Which I think is called the fentinel tariff as far as I understand. Uh Vietnam,
• 111:30 - 112:00 Thailand, 10%. That doesn't go away. Um unless it's one of the exemption products. So for example for us power supplies which we mostly make in Vietnam for the US um those do not come into one of the exemption so those will be 10% okay this week. Yeah so that's that's what I heard was uh the headlines that went out so I got a bunch of emails this weekend from viewers who were thrilled
• 112:00 - 112:30 because all computer hardware components are now exempt. Yeah. Uh my understanding is that is not the case. That's right. So, do you happen to know sort of which categories R&D are for? So, for example, if you made cases in China today, you'd pay 20%. Now, we make cases in Taiwan, so that falls into the exemption uh which means that would be zero today. Okay. Uh so, it just depends on where you're making them. I think um gaming components um are exempt, but quite honestly our our um our whole
• 112:30 - 113:00 logistics guys are going through every single day going through all the tables trying to figure out firstly um you know have they been coded correctly because when tariffs are zero it doesn't really matter what code you bring them in and there's often times where a product could have one or two codes depending if it's a peripheral or is it a gaming product so all those are being looked at um but yeah typically If something is a PC peripheral or a gaming uh component then it should be and it's from China it should be 20% as of as of today right
• 113:00 - 113:30 and if it's outside China then it would uh if it's exempt it's zero if it's not exempt it would be 10% that's how it works okay um let's see how about uh the real world impact so just generally speaking what is sort of the real world impact of the not just tariffs broadly as a thing but uh tariffs the way they're being implemented the last several months. Um, yeah. Well, I've been thinking about that quite a bit. So, I think for the for the for the
• 113:30 - 114:00 industry that we're in, right, DIY people building their own computers, it really is going to come down to what happens to graphics cards and then CPUs because that's at least half if not threequarters of the cost. Um, so if Jensen or Nvidia manages to cut a deal with a John Padman and can and uh uh TSMC can do the same. Uh so the graphics cards don't go up. Um uh then that'll be very helpful because if you think about it, if you're going to build a PC and the power supply is an extra 10 bucks,
• 114:00 - 114:30 memory modules extra 10 bucks, not making any difference. If everything goes up by 50% that you may choose either not to do that till next year or you know sometime in the future or you might just go and buy an Alienware PC, right? And if we look historically, what do you think high tariffs cause? Well, if you have um if you're a country where you're trying to protect an industry that you have, let's say it was really important to have a car industry and you saw uh a foreign company dumping
• 114:30 - 115:00 cars like selling cars cheaper in your country than they were in their own, then you would step in to stop that. Say we can't have somebody temporarily destroying our industry when then when the factories are empty. Uh then what do we do? So, so there's um a lot of reasons that that that tariffs exist and are good. And I've often thought here that things like solar is um an industry that would be good to see in the US. You know, it doesn't take advance fabs or anything. Be very easy for us to have
• 115:00 - 115:30 control of solar. So, I think that's something that um you know can make sense. But in general um there's no question that tariffs on consumer goods, like we said before, are going to flow through to be an extra sales tax. So that just puts the price up, right? If we try to play devil's advocate, um I've asked everyone this question. Some of them have just said no. But if we try to play devil's advocate, can you think of a positive that could come out of tariffs where you've just mentioned some positives for tariffs as a concept, that
• 115:30 - 116:00 makes a lot of sense. Um but the the way they're being sort of executed the last several months, are you able to find an upside there? I haven't seen one yet. Okay, that was a very short question and answer. the question was longer than the answer. Um on the uh on the flip side, what do you think the specifically the frequency of the change um what does that impact most? I guess dayto-day for you, how has your job changed? Well, so trying to
• 116:00 - 116:30 keep up with what to do, I mean literally you talked about cycles. I mean just us figuring out what to order and what to bring in uh to the country. So, if you knew tariffs were going to go up by 10% in a year, then you could plan around that. If they're at 20% now and you don't know what they're going to be, do you bring extra inventory in or do you not? If you bring extra inventory and the tariffs go to zero now, you've got a loss. Uh, if you bring tariffs into 22% or 20% and the tariff to 50, then that's a good thing. But there's a
• 116:30 - 117:00 limit to how much imagery you can bring in. Um, and we've certainly brought some inventory and I I heard uh Apple brought in 30 tons of iPhones last week. Yeah. Yeah. So, so people will do that when Well, so that's where I wonder uh not I don't expect you to speak for Apple, but from how the exemptions have rolled out uh for people who are bringing in products that are now exempt. One thing I don't know, I don't know if you know this, but it is just do they then get
• 117:00 - 117:30 their money back if they just paid a tariff? Yeah. If we if you've paid the tariff last week for something that's now exempt, you can get it back. You can claim it back. Yeah. Interesting. Right. Yeah. Yeah. Yeah. So, you know, you can follow on from that thinking about what consumers will do. And I think what I've seen so far is you you'd expect consumers to sort of think this thing through, especially the crafty guys that do DIY and buy now rather than later. But I think the the second roll on from this is that people are a bit worried about
• 117:30 - 118:00 their jobs and, you know, their mortgages and what the strength of the US dollar and all this things. So, I think it does put a shock into the into the system. if people if you thought yeah the world's going to be the same in nine months maybe there'll be some tariffs small ones then you might buy ahead right um but I it's up in the air and and uh you know even with uh graphics cards which is I think where most people start the thinking about um you know a gaming PC you know who knows and the prices are already jacked up
• 118:00 - 118:30 because there's a shortage of 50 series right so who knows what prices are going to be in May you know uh that's that's the tough thing right yeah and this was uh if companies have so we were just speaking with height. This is going to be in our video but um where one of their concerns is if if on some categories they have to adjust the price up and they bring products in and pay a tariff and then in several months that changes assuming assuming you can't necessarily get your money back, right? You still need to sell through that
• 118:30 - 119:00 inventory at the elevated price which makes the company look like the bad guy. Well and and and I think that's right um or you lose money. And the other thing is you have to be a little bit careful with inventory because things do change. And so the last thing we want to do is to you know if you build up six months of inventory let's say you you think you're building up 3 months but then the consumer dem goes down that was 6 months then Nvidia decides to change the connector and now your power supplies are obsolete unless you change the cable. So you have things like that you have to be a bit careful of. Yeah that makes sense. Um there's a lot of mention
• 119:00 - 119:30 of manufacturing choices. China, Taiwan, Vietnam, Thailand, Mexico. the US hasn't been in that list. So I guess to to pitch the question as I've read it in the comments, why not just move manufacturing back to the US? Yeah. Yeah. So I think that um the the problem is that most people don't realize here is that worldwide manufacturing um is anywhere from sort of two to three to $4 an hour typically. here. You know, the
• 119:30 - 120:00 minimum wage in most states is 15 to 20, but most people want more than that, right? Um 725 where I live. Yeah. Wow. 725. But you can see that even even um even if you if you did that, most people aren't going to sign up on mass to do, you know, the 4 million unemployed Americans aren't looking for, you know, sub $10 jobs, certain hour jobs. So, I think that it's very very difficult to move manufacturing back. Now, you could um look at moving some things. I think it would be good for the semiconductor
• 120:00 - 120:30 industry to have more uh footprint here. And I know TSMC is, you know, putting a fab in Arizona and expanding it. Intel as well. Um, but they're talking about maybe they could make 10% of AMD CPUs. It's a it's a small thing. There's just simply not enough manufacturing engineers and people wanting to work in factories in the US. What is what is a manufacturing engineer? What do they do? Well, they figure out the tooling. They figure out how to keep the machines running. If you're going to use robotics, they have to program them. they have to go and source them. So really from the if you think about
• 120:30 - 121:00 putting a factory in place, you start with an empty shell, you got to fill it with equipment. Someone's got to spec out all that equipment, do all the tooling, make all the products. Even for light assembly work, you've got to figure out all the lines, figure out, you know, how you know what each person's going to do. And it's it's a reasonably complicated thing. Light assembly is what we call it for things like cell phones and power supplies and that sort of thing where you're taking all these piece parts and putting them together. I just can't see that effectively moving back to the US regardless of what the tariff size. It's not going to happen. Sure. More likely
• 121:00 - 121:30 if if uh the Mexico um trade balance, you know, continues as a free trade zone between Mexico and Canada, you could see a lot more work going into Mexico. And I think that would make sense. I don't think that um any government here is going to be as frightened of Mexico as it is of China. Sure. So I can see a lot a lot moving back to Mexico. What are other factors in that? I mean supply chain for example. Yep. Let's take a power supply that you know when you make that someone's got to wind the transformers. You got to get the capacitors. You got to get the you know
• 121:30 - 122:00 all the passives. Um you have to get the packaging and all of those factories are set very close to they're all in Asia and they're all set close to where the ODMs live. Um so to reproduce that takes an incredible amount of time and also it just adds cost all the way through the chain. And then they have suppliers too. And then they and then they have suppliers. Yeah. By the way, we do have factories in the US. Um, and we we bought a company called Scuf that makes those trick controllers. Um,
• 122:00 - 122:30 and that's sort of a uh most of the sales they do are customized. So, people want to have um different uh thumb sticks, you know, different graphics. Those are done down in Atlanta. Uh we make PCs um you know, ready-made PCs we make in uh in Atlanta as well. Now, assembly. Yeah. Doing assembly. Um, now of course if tariffs on components happen then it won't make any difference. If you have to pay 50% tariffs let's say for graphics cards and CPUs then it doesn't change. So that's kind of where I'm getting at. Yeah. is if if so you do in this case have
• 122:30 - 123:00 factories already but um the I guess if the the sort of stated objective of the tariffs is to quoteunquote bring manufacturing to the US and then for a company like Corsera that has some manufacturing in the US uh it my understanding is the tariffs are still affecting yeah all the way through I mean think about so we worked with our uh main power supply uh vendor the other day ODM and I says what percentage of
• 123:00 - 123:30 labor is in in the power he says about 11%. So it means the rest of it's all in components. Now in some cases you might say all right well we'll decide how to you know could be wind transformers. I mean winding transformers um some done manually some you know uh with robots but but that would cost a fortune in the US. So you know every one of these components you know you sort of go back and say okay well now you got to bring in the you know the pig iron and and this sort of thing. I mean it really uh you know we can make capacitors and resistors in the US. So all these things add up. So yeah, if if all you do the
• 123:30 - 124:00 last mile of just putting the assembly part of it together um doesn't really change if you have to pay tariffs on the components and and you still that last even if it's 10% if that goes to you know 5x you know it's a huge number. So, so I think yeah, the biggest mis misconception is the fact that it's the American consumers that end up paying uh tariffs essentially when the prices roll through and some of it I'd say 90% of it gets to consumers and then some of it gets absorbed which means companies make less money and the stock market goes
• 124:00 - 124:30 down. When you say u misconception mean American consumers pay it. You mean that's the reality and the misconception is that they haven't figured that out yet, right? I think everyone's gonna for most people a lot of people don't bother to read the news, right? Um so for for a great deal of people, they'll the first they're going to see is prices going up. And um you know, I think that's I mean, if everyone starts seeing iPhones at 1,500 bucks or GPU cards at $3,000, then
• 124:30 - 125:00 then they suddenly get a sticker shock and start asking questions. the uh exemptions that have been rolled out the last couple days. And I think I actually saw just for people watching this because we don't know what's being stated today, but I saw there was supposed to be more news on that today. Um but with the exemptions rolling out, I mean, is it is it over? Is it done? is is consumer hardware, you know, normal prices again or Well, I think I think what Friday or Saturday morning told us was that at least uh the government is
• 125:00 - 125:30 realizing that the show so far has caused mass panic in the markets and obviously I think everybody knows the bond market started melting down on Friday night. So, um so I think that pause was there for a reason. now um you know will that change things moving forward? I suspect a slightly more cautious approach. Um but I still don't know um how it's going to roll out because if um if the current government
• 125:30 - 126:00 really feels that semiconductors should be moved to the US um and they feel like the way to do that is with a tariff then there'll probably be a tariff. Um, for me, I would thought the first thing you were going to do if you wanted semiconductor manufacturing back in the US, you'd have a series of talks with GSMC about, okay, what's it going to take for you to move back into the US? Maybe some tax exemptions, something like that. But you you try and figure out how to get it done or you go to Intel. Well, I guess there's a new foundry now that TSMC is part of, I think. Uh, and ask them how what's it
• 126:00 - 126:30 going to take to expand, you know? I think that's the way you would do it. Incentives. Incentives rather. Yeah. It's carrot versus stick, right? Right. Right. Uh this is probably worth addressing where another misconception I've seen is that all these companies in the space fully own and control all the factories that make their stuff. So is that something you can speak to? Yeah, I mean and and and that's not what happens. I mean um typically um once you make a move to Asia um I mean what we did with
• 126:30 - 127:00 our factory which is 20 years ago we put this factory in place in uh in Taiwan was was was quite unique. We had to because of a time there wasn't an established ind industry for you know overclocking and testing chips and you know screening them and that sort of thing. So we had to do it ourselves. But if you go over to Asia um and you want to make power supplies there the first thing you see is well there's factories already that make power supplies. So why would you want to recreate that when you don't speak Chinese in my case right? So um so yeah so that's typically what
• 127:00 - 127:30 happens. Almost everything um that's made is um made through ODMs. And as I say, there's a few exceptions. You know, there's some guys making cases that have got their own fabrication facility, but generally it's people that specialize because just from scale. If you're making cases, you can supply five different people. Obviously, you're going to have a um much lower cost than just just one in house. So, right. It's also easier to keep a a factory line, I guess, fully occupied all the time if you have multiple customer. So, so
• 127:30 - 128:00 that's what you find. You have people that specialize in in our case again you know um for DIY components people that make fans I mean there's big companies that make fans big companies that make uh cases power supplies and so on. Now we'll meet with Doug Melbourne of Protocase and 45 Drives. 45 Drives is a NAS and server solution provider. Protocase is a contract manufacturer with locations in Canada and in the US. Vitali took a break from filming as Andrew and I drove out to Wilmington, North Carolina, a place we've both been
• 128:00 - 128:30 a lot to meet at the brand new manufacturing and assembly facility being built by Protoase, local to us for its inbound server case stamping and server assembly plant in the US. This joins its existing Canadian facilities. Now protocase and 45 drives don't make every single component that they use much like I power and cyber power don't but they do make some of them and they also make some of them in the US which is why we've included them in the story to get another unique perspective. What's the plan for right now there's
• 128:30 - 129:00 some assembly. What's the plan for manufacturing in here? Yep. Sure. Great question. Uh the assembly side of it um you know we'll tell you where the economy goes and where the whole tariff thing goes, right? Because in an ideal world, what we'll be doing is making certain models here and certain models in Canada. Okay? Uh you know, if tariff walls go up, you know, maybe we'll make everything here and repeat it in Canada, which is inefficient and a consumer shall pay for it everywhere, but but you
• 129:00 - 129:30 know, we get to navigate it, not to decide that. So, uh uh assembly is step number one. you assembly's assembly really well is difficult. Yeah. But getting your feet in the ground, it's a great place to start. Uh the equipment's already been ordered in here to make a bunch of the metal parts. We make our own metal. Uh we make our own plastic parts. Uh we do production 3D printing for plastic parts and we do machine machine metal and
• 129:30 - 130:00 sheet metal. We do powder coating, all that kind of stuff. uh and we the boards that are custom to us uh we design we have them made outside. Okay. So what's happened we've ordered the equipment here uh for some of the sheet metal manufacturing and 3D printing will happen here for most the parts that that uh sheet metal you cut first that's still going to be done in Canada because it's space intensive and multi-million dollar investment. So for the machines I
• 130:00 - 130:30 guess for the machinery. Yep. So uh we will put all our forming, painting, digital printing, 3D printing is going to fill up the rest of the space here and where that will get us uh we will hire about a hundred new people this year overall growth and yeah we've shifted our growth to the US. Uh all our growth in the short term will happen in the US. Was that something you were already planning on? Absolutely. In fact, we've been planning it. You know, I think my first trip to really look at
• 130:30 - 131:00 locations which included North Carolina would have been a dozen years ago. Oh, wow. Okay. Well, I'll tell you what we don't make is stuff that's done in the industry. So, well, uh power supplies. We got great power supply manufacturers. Uh we we use a lot of Zippy and and we use Corsair as well as a brand. we use when you're bringing stuff in. You know, one of the other companies I was speaking to, Cyber Power, they they assemble it all in house. Uh they don't build their own cases like you guys are
• 131:00 - 131:30 doing. Uh but, you know, they bring in the boards, the GPUs, the CPUs, everything. So, when you're bringing that stuff in, I mean, are you getting hit by those tariffs even though you're assembling you or you're stamping your own cases? The simple answer is yes. uh is very much Yes. Uh it's Yeah. And and Yeah. And and it adds to our cost for sure. Yeah. And that's the cost that we push through the end user, right? Uh as a percentage of
• 131:30 - 132:00 overall value, it's less for us because we have, you know, real North American manufacturing stuff. What's I actually don't know this. So, I've only paid attention to sort of the the Asia part of the story for this trip so far because that's where everyone made I haven't met anyone who manufactures anything in Canada. So, um do you know what that situation is right now between you your two branches and the two countries? Yeah. Uh highly uncertain. Okay. Uh is where it is. The
• 132:00 - 132:30 threat of tariffs is there. Uh and you know, so where is it right now? No, we don't pay any tariffs on our stuff that moves across the border right now. Uh but you know, daytoday that could change. Uh but I mean it will be what it'll be. Will tariffs and the value of what comes across the border. Then you ask the uncertainty is the killer. It's the real killer. Even though you're making the product
• 132:30 - 133:00 here, what about the the raw materials you bring in? You know, like the steel, where is that sourced? Or the screws, right? like all these small things, the grommets, things people don't think about, connectors, how does that uh come into play for you? It it's a great question and again the answer I'd love to give you a simple answer, but it's complicated. The world market is you know you think about things the way they're made. It's like anything you look at you where'd that come from and then you go well where did the stuff they make it with came from and whatever
• 133:00 - 133:30 else stuff that made that with and the answer is everywhere. It's a tangled web, right? And uh you know tariff on primary metals is one of the things that's in you know your president brought that in last time he was in brought it in again. You know Canadian metals are tariffed at 50% coming in right we buy metals less expensive in Canada. Now all that said there's a structure to tariff things that have significant metal content and what comes across the border. So um just complicated. I don't know how it's going
• 133:30 - 134:00 to work out. Um I'm not you know the whole thing you know Canada US tariffs you know Canada US you know you say there's not much you don't know many people that manufacture in Canada because there's not a lot of manufacturing in Canada there used to be just like the US and it all kind of died and went to low wage countries. So our countries are very very much the same in terms of where we are on that. Uh and the whole thing of the idea of building back manufacturing jobs in Canada is very much the same as is in the US. Countries are so much the same. Mhm. the
• 134:00 - 134:30 tariff story when I look in behind and underneath it and I listen to the economists that the politicians are following they say the story is mostly about China right but also about low wage countries so I don't know where it's going to end up uh I'm okay the idea of bringing manufacturing I'm going to say North America because I really do feel we're in this together but the thing of bring it back to North America I'm all for it we've been doing this before this was popular right we've been manufacturing North America so tariff
• 134:30 - 135:00 walls go up and around. I go, we've already solved a bunch of the problems. A whole bunch of our value ads already in North America. So, I'm like, good advantage us. I didn't ask for the tariffs. We took this challenge on on our own and we've done it very very successfully. People buy from 45 drives understand what's special about us. My view doesn't have much to do with what's going to happen. Of course. Uh and uh and I'm like the the thing that you know tariffs I mean this is why tariffs been problematic and why the world kind of went to free trade. The imbalance in
• 135:00 - 135:30 countries creates the problem. I don't know how you deal with it. But I'll tell you what has happened and a historical perspective I could talk to you about. I got a scholar I know at a university at home who studied tariffs over you know Canada US reciprocity 1850s. Okay, you know, and what happens is somebody gets powerful, they get big as a company and and Intel or the automakers or somebody like that and they own lobbyists, they get the ear of the politicians, right?
• 135:30 - 136:00 They'll get a you know, the chainsaw out, they'll cut a hole in the tariff wall, right? Those have I can tell you examples that happened in Canada, you know, the 20 early 20th century, late 1800s. And uh I'll tell you is 500 person up and coming. Yeah. We're we're in enterprise computing. Okay. We compete against the legacy companies. They're the dinosaurs. We don't have political influence and the other guys will have that. I just hope that it's fair when if they cut holes in the wall when it gets you know a tariff wall cut
• 136:00 - 136:30 in for a big guy you know disadvantage a little guy is not going to serve the country well. Right. But it's awful. What do you think is the biggest misconception right now? There's uncertainty. There's all kinds of uncertainty. A lot of people say it's going to push prices up for the consumer. And other people say, look, you know, you look at Nike making, you know, running shoes and they they come out of China for $10 good. So now it's, you know, $20 and you're paying what? 100 bucks for them, right? Can that come out of Nike's, you know, whatever. And
• 136:30 - 137:00 so I don't know what's going to happen. I mean greater impact to 45 drives protocase. What do you think the how does this play out long term? There's not a fundamental change to our business plan. So we've had to earn our living by moving into the higher end, you know, like our home, you know, enterprise. We compete against like the the dinosaurs, the legacy companies are they're late in their business cycle. They're so costladen. Now what might happen is our home labs products maybe the
• 137:00 - 137:30 differential for the offshore built stuff's uh maybe it's gonna lessen and you mean the gap might close the gap gap might close. So in other words saying that the uh are you saying the competitors competing home labs products will approach your price? Yeah. Yeah. They they'll probably come up. You know, I I look at uh storage boxes are HL4 and HL8 and you can look at the equivalent and the you know the storage appliance and you know what you might buy for $1,000 you might buy for $1,400 for us
• 137:30 - 138:00 right and and you look at that and go it's not big when you look at the differential and what we sell which is open server Linux accessible built for you know our heritage that's built for the guys in the server room right home lab's a natural thing so we get that versus plastic closed systems you know, scale down processors, etc., etc. We deliver value today. Hey, if that lessons, well, advantage us, right? And it's all good. But, uh, I have zero
• 138:00 - 138:30 plans because I don't know how that's going to work out. So, we're not going to change our business any blow up politically in a bit and it'll all fall back to where it is. So, we I'm good. I I I think there's promise there. Like I really I look I I'm a proud Canadian, happy to be Canadian, but I think this is a kick-ass country. I I really truly do think it's kick-ass country. It's people, it's entrepreneurship, it's the ability, you know, you get too stagnant, corporate America, it's too big, too strong, or the government gets too big,
• 138:30 - 139:00 too strong, it's oppressive, but not a country where people like being held down, then they'll work their way back. And it's it I think there's a golden age, possibility of a golden age coming. So the other thing that disappears when you're offshore is the ability to do stuff at small volume or the ability to do stuff fast. So let let me tell you where we are and in the metals manufacturing business. So we look at this drive cage here. Look at that that the metal part that's on top of that, right? With a printing on it and powder coat and everything else. If you want to order that as a part, you had a drawing of
• 139:00 - 139:30 that. You could put it in to us today and accept their quote. And the protocase and protocase does all our manufacturer 45 manufacturer contract manufacturer. And if you want to buy that part, your company want to buy that part, we ship it out the door and FedEx to you in two to three days. That's okay. That's impressive. Yeah. So, we sell to this whole layer of people who do often it's it's like high value, low volume manufacturing. And when they look at that and say, I don't have to order, you know, 3 months in advance and not know how much because I'm bringing a new
• 139:30 - 140:00 product. I don't even going to sell. That's who we sell to in this. But you need the value. You can't do it. you know the consumer world the consumer so benefited from you know the people of you know the second and third world working for $2 an hour for us right I mean they have benefited right but we you get up the chain a little there in the you know into the B2B world and everything else and at speed incredible advantage one of the earlier parts of our journey involved checking in with Cyberpower PC cyber power will be represented by Nam Hang brand director
• 140:00 - 140:30 and Eddie Vaugh director of R&D and product Rob Ter from height which is part of competitor I by power joined us as the two competing companies talked about the tariffs and again despite both having power in the name these companies are not related you got a shotgun mic on all right so we're going over to cyber power cyber power and I power they they both have the same last name the powers yeah the powers is there any relation whatsoever no no okay has there
• 140:30 - 141:00 ever been one no I buy Power came first. Uh, and then they started up Cyber Power a couple years after. Uh, and now you're competitors that end up roughly on the same street. Yeah. Yeah. I mean, this area, there's a lot of PC components in this area because we're not far from Newegg headquarters. Between these two companies, they represent around a million pre-built shipments per year in the US. I've also known each of these people in this section since about 2012.
• 141:00 - 141:30 So, we have a long history. What do you think the biggest misunderstanding is or misconception is in the public right now? I think the biggest misconception has to do with where the money is going and who's getting it. Right. Okay. Right. It's they people need to understand that tariff and tax is synonymous. Right. As soon as a product comes in, we are paying it. And I always give this analogy which is like if there's a 10% tariff on something that was $100, by
• 141:30 - 142:00 the time it gets here we have to pay $110, right? But if that tax was 100% it's going to be $200, right? So So there's no way that we can charge less than $200. That's the minimum. And that's the key is that but they're always wondering, okay, well jump from 100 to 200. Where's that money going? Well, that money is a tax. It's going to go to the government. That's just how it works. So, usually we do uh at at this time of the season, we're supposed to do all the refresh for spring. Uh we're
• 142:00 - 142:30 supposed to do we do have a lot of OT because of of that all whole tariff going on kind of disrupting our uh you know product coming in. Uh so we're not doing OT for the last few weeks. How many employees do you guys have uh here? Uh around 200. Wow. 200 employees. Is all your assembly in this building or you have No, we have multiple buildings. Multiple buildings in the United States. Yes. All in the US. In the United
• 142:30 - 143:00 States. A different uh I mean uh we have four different uh uh factory sites for building. Yeah. But this is where we build all the custom builds. So where where are they spread out? So you've got this is the city of industry throughout city of industry and Ontario and other places, but they're basically focused on different products and vendors, you know. Okay. Wow. But this is where we spend more time on uh with all the custom build. So require a little more work. Roughly how
• 143:00 - 143:30 many systems do you build a year? Um a year right now it's about it's getting very close to around 450,000 almost. [ __ ] Yeah. About that much. Almost 500,000. What about you guys? We're we're about the same. Okay. Coming in and half. But between two companies here pushing a million down the street. Yeah. A million systems a year. A million Americanmade computers per year. But then other than stuff like
• 143:30 - 144:00 cases that you guys make and I know you guys have done some stuff too, but other than that those items, everything you're putting in the systems is coming from suppliers. Yes. Yes. So I mean most customers, they wouldn't want us to manufacture our own products. Like we there are certain products that like say cases, right? Where the case is kind of a commodity product and if someone just wants a computer, they want a specific CPU, they want a specific GPU, they want a specific
• 144:00 - 144:30 um and so making those products may be okay, but customers certainly wouldn't want us making custom motherboards or custom GPUs. It comes down to the elasticity of expertise, you know, like how far can we stretch our expertise. I mean, and and that's the interesting thing right now is the people who have the most expertise are the people who currently manufacture those products. And now there's this artificial swarm saying that they they have to be made here. That doesn't consider like who
• 144:30 - 145:00 makes it best or who who has who has figured this out the best. Are there any products that that you guys any components that don't come from China that you specifically know about today? Uh shipping label. Jesus. Some packaging. Is that Uline, I guess, or something? Like that's Well, I mean, no, no. I mean, the the label where you bought the label, stuff that we print is from local sources. Of course, some of the packaging because we have to rebox sometimes damage boxes. We also print those here to try and
• 145:00 - 145:30 address the common like top comment of like screw you should make it in the US right um one thing I haven't asked is the other side of that which is so for system assemblers like cyber and I power uh why make it in the US why assemble it in the US I mean we've always kind of the core to us our business was always the customization and that is really the key is that we wanted to give them ultimate flexibility, not have
• 145:30 - 146:00 proprietary parts, allow them to be able to swap things that, you know, or have it futurep proofed with things that are standardized. They may not be great components for a very long time. Look at how Intel's GPU strategy has been going for them, right? Where it's like they they know they need to start there. They they're starting now. It's already 10 years too late, but they need to start simple with low-end hardware that doesn't actually perform very well for a while. um that's impossible to avoid when
• 146:00 - 146:30 moving these types of products internationally. Yeah. Do you think end users are going to want to buy a cyber power system that might be full of made in America components that somehow performs significantly worse than their Chinese counterparts and are more expensive that are more expensive and um and that's that's bypassing the whole concept of feasibility of sourcing and time to market and all that sort of stuff. I mean they we these products are made in America because end users are very specific about the components that
• 146:30 - 147:00 they want. I mean we're basically the brokers of components that people already know they want. They just happen to we put them into final systems. We have to think about the whole supply chain. You know who's it affecting the manu vendors? We work with manufacturers. We have to talk to retailers. Then we have to negotiate pricing because the retailers want to price manufacturers want to sell a certain price. And we kind of become mediators working it out to say, "Okay, well, what what can we do to make this affordable for Americans, you know, and
• 147:00 - 147:30 then we usually work this out and we move on." But this time, the problem is with it changing constantly, everybody's wondering like, "Oh, what's going to happen tomorrow? What's going to happen next week? Should I invest now? Too much? Too little? Am I going to be in a hole later because of regret this?" Eddie brought up a good point. He said, "The truth is today there are orders that are sitting in our system right now that we people have paid for it, but tomorrow when we get the parts, we will may be paying more. We're going to be
• 147:30 - 148:00 shipping it regardless at a loss." Yes. So, how do we make up for that? Well, our cost average has to go up. Then we adjust and we hope that things balance out. In a normal cycle, this could be resolved in a a month. But if it keeps changing, then we have no idea when this will resolve itself or normalize. How good is your understanding of your own inventory in terms of I'm making money, I'm losing money on these sales, you know, like is that's are you able seems impossible? Right now, to be honest, we
• 148:00 - 148:30 can't. All we can do is just go daytoday. You know, as the price comes in, our cost average goes up, but we need to adjust. It's going to reflect in the customers. They're going to be very much at a loss. Why is the price fluctuating so much? And that's because it's happening in real time. Every time that a price goes up, we have to adjust the quantities because we might not have the funds for it or whatever. I think a lot of customers don't understand that sometimes we buy things at a higher price because we're advertising over time that that that the manufacturer is
• 148:30 - 149:00 going to improve their production which then lowers the cost. Okay, we may be paying this today and as this stabilizes over time, our cost goes down. Nam if you guys reduce your order volume of motherboards or video cards or whatever cases what happens when you reduce order volume if you go from you reduce your order volume by 30%. Mhm. Right. What is the the ripple effect of that? Well of course we reduce the basics of econ economics here is that if we reduce our
• 149:00 - 149:30 volume the price is going to go up. But there's a lot more behind the scenes too because these numbers that we have thought about didn't happen like overnight. We had planned them for six months, you know, ahead of time. This is the volume we see happening. This is the trend. This is the price we think it should be. And when this changes immediately, it's not just us that we can't just say, "Oh, okay. We're going to cut our order in half." Those companies that we rely on also have their projections that they have to deal
• 149:30 - 150:00 with. employees, you know, it's a it could be a huge snowball snowball effect. And then on top of that, you have big seasonality. So, if certain parts of the year, I mean, let's say that they're expecting for their spring refresh, there's a certain amount of people they employ and they need to be able to figure out how to keep those people building things and working and helping to generate profit. I guess you probably like a lot of industries have seasonal hires or something. Yeah. have
• 150:00 - 150:30 to think about technological obsolescence which is something that affects us more than most industries. Yeah, the inventory is goes bad very quickly in this industry. Um what is it about the execution that you think is most troubling from the past say you know several months that you've been dealing with this? I would say just the most is the inconsistency. Mhm. If there was a plan where you know that where certain objectives were met to reduce this tariff or even that it was escalated for certain reasons that made
• 150:30 - 151:00 sense then we can plan and predict for it. you could see how things are trending and kind of predict that. But at this point, it's not we can't predict anything. And our business relies on consistency and predictability because there's no there's no clear pathway to actually make these products in America, right? Like if if our the widgets we made were let's say nails and we were a nail company and we we made our nails in China, I I feel confident we would be able to move our production to America.
• 151:00 - 151:30 uh and get that handled. But because it's actually not within our capability to move the production to America or even our immediate suppliers to move their production or their suppliers to move their production, it almost feels like a bad faith argument because the solution can't be to move it to America because that's not possible right now. um while the the tariffs seem to be more of a negotiation tactic
• 151:30 - 152:00 for a rival nation. So, we're stuck in the crosshairs with the rhetoric of well, just move it and you won't suffer the pain anymore. But that's literally not an option. Yeah. If he said like that, they said that it's going to be 100% and this is it for the next 10 years, we can work around that. We will figure out a way. That's a good faith negotiation. But the fact that you're saying you're asking manufacturers to bring it to America, but they have to consider that cost. They're going to
• 152:00 - 152:30 have to invest in it and they don't want to invest if something's going to change. And the reality is if we continue to import and sell products at the rate that we would, we will have run out of money within two weeks. So for forget forget the like let's let's pull ourselves up by the bootstraps and invest here locally. No, there's no money to do that, right? Yeah. the ripple effects. Part of that I guess comes from what you're saying which is uh the the surprise nature of the
• 152:30 - 153:00 changes. The question is what do you do right like in this current situation right now? I'm sure you guys are having these conversations probably literally daily. So I what is what how do you deal with it? So right now I mean if we have commitments with vendors we we just fulfill them. we have to accept them. We try to work as much as we can to remove the burden from the consumer. We work with the manufacturers. We work with the retailers. We're asking everybody to put
• 153:00 - 153:30 in their part. What can you take out? What can you take out? How can we bring this down as much as possible? And that's what we've been doing. But at the end of the day, there will be a point where we'll be like, this is the most we can take out and this is the price it's going to be now. And then we have to wait and see is the will the market bear this price. The biggest worry that we have is to not to be like, you know, apocalyptic, but there is this potential of a collapse, you know, like what if everybody decides this is priced too
• 153:30 - 154:00 high. Nobody wants to buy it. Everybody decides we're going to wait. How long are they going to wait? How long do the manufacturers have to wait? Everything starts to halt. And I want to point out some irony here. We shared with you our costs and the tariff fees. Um, and right now our solution is we're we're not shipping into the United States and we're depending on other regions to be able to move forward. Cyberpower manufactures their products here in America. They don't have other regions to do that. I see where the irony is
• 154:00 - 154:30 going. So at a certain point, we may not collapse because we're able to sell internationally, but Cyber Power is effectively an Americanbased company primarily in the US, I guess. What percent of your business is in the US in terms of purchases, I guess, or orders, whatever. About like 80%. Wow. Okay. 80 plus or more. All right. Yeah. Yeah. Possibly more. It would be close to 80 to 90%. Do you think this kills
• 154:30 - 155:00 some American companies? Not necessarily anyone's here at this table, but this is this is like a high stress event. This will kill some people. I'm thinking of the novel The Jungle and that kind of like worry where like is money going to be here tomorrow? I need to start saving and if they start saving they're not spending this weird right at the everybody's talk arguing is it inflation is recession we or a stackflation which may be even worse somewhere in between. Right. Next we'll check in with Darren Sue who began his business in 1997 and formerly co-founded I power in
• 155:00 - 155:30 California around 1999. It also owns height which is a separate entity run largely by Jeff and Rob from earlier. Darren will be joined by Kevin Xiang who manages purchasing. You know starting in the '9s uh in all those years can you remember any situation like this? No. Okay. Nothing like this. Never. We we've been through Y2K. Mhm. Financial crisis, Bitcoin crisis, COVID. Now this tariff
• 155:30 - 156:00 is unprecedented daily. changes, right? It's definitely different now. It's almost on not even daily basis, not on hourly basis. What is latest, right? Because we have so many containers on the way here. How would it come back? How do we stop ordering, continuing ordering? What countries coming out which we never encountered before? Never. I know we you know just from power side we have dealing we were dealing with multiple suppliers and they from various countries from you know just on top of
• 156:00 - 156:30 my head we have suppliers coming from China, Taiwan, local, Thailand, Malaysia, Indonesia and we name Vietnam. Vietnam definitely. Yeah. Right. What about uh on the purchasing side? Yeah. Just to add to what Darren was saying, right? Like uh I think in total I I did a quick count, we have like over 60 vendors that we work with. Um just because if we were to put a computer together, it's a total of like 10 components, a combination of 10 components, right? So to our understanding, each category is also
• 156:30 - 157:00 different on how tariff is being handled. Yeah. So that's that's my the hardest question I have today is uh let's do it. Do you know off the top of your head, do you know what the current uh rate is or the tariff is for the blanket China tariff like right now? Do you guys do you guys know what what it's at? Cuz I I've heard like 65 104 125 you know to our understanding uh it's 145%. Yeah, that's true. That's general. Yeah,
• 157:00 - 157:30 general general and could be more if your components including metal, steels, aluminum, you could add another top on top of 25 or 20%. Right. Right. Where um Darren, where do you guys assemble your computers? Um so that's good thing unlike um many other company that built simply oversee. So we import majority of components, majority of our components from overseas but
• 157:30 - 158:00 100% assembly test packed support right here local Los Angeles or St. Gabriel area this area. Yeah. And I've been in the part of the warehouse next door. Yeah. Yep. Um, so if they're assembled basically on the other side of these walls in California, how do the tariffs end up affecting you? If you can help walk people through cuz it's uh you end up
• 158:00 - 158:30 you're the customer of all these other companies, right? So you guys are in kind of a unique position because some of the other companies we're talking to for this piece, they're the ones who sell you stuff, right? Yep. So, since you assemble in the US, I think this is something people might be confused about where it's like, well, it's it's the whole manufacturer in the USA thing, right? It's assembled here, but the tariffs still affect you. So, can you walk me through sort of the steps when you buy stuff? Yeah, sure. Um, like I was saying, like, you know, for us to assemble a a complete computer, it's 10
• 158:30 - 159:00 components. We do buy from these vendors probably you have interviewed as well, um, including addin board partners, right, that sell Nvidia cards. uh unfortunately when they uh import these whether it's graphics card motherboard it's already tagged on to the tariff so um you know if it's a $500 graphics card it will tag on whatever the uh tariff rate from either Vietnam or China right and then then be sold to us and at this point in time we have no choice but to
• 159:00 - 159:30 take them and then you know build it build the system out of the the increased cost that we're we're getting right now. Yeah. one of the component like cases. We do manufacture our own cases unlike some of the other system integrator who may have like taken cases from other company kind of you know white label or relabel it. Um so you know that's one part that I know um our CEO as well as Darren's working hard in trying to relocate um you know the manufacturing part either from China out to you know Thailand or or Vietnam. So,
• 159:30 - 160:00 at least I think on that part is something that we could do on our part, I by Par's part to try to uh mitigate some of the tariff that we're seeing coming out of China. Yeah. Right. Mhm. That's maybe a good place to ask. Um so, uh you talking about like relocating a factory or moving to a different factory or something. Uh I just to preface this, I know the answer to this one, but I think it will help. So, why not? I mean scary question
• 160:00 - 160:30 like why not just move it to the US right I think that's what kind of like a lot of people are asking right and so I know it's a big question because there's a lot of factors I'll try to answer my best ability if you don't like it cut it um um yeah the building the US is very very difficult you got to you have to go to the CT ordinance pass the CT laws and then the the labor cost is way too way way way too high here And I don't think
• 160:30 - 161:00 currently we paying let's say MSRP is $99 on the case if we manufacture here I don't think even 145% tax tariff will cover you know at the end of the day you might go up to 390 or 450 at the end of the cost right and also you know trying to find people labor you know locations factories supply chain supply chain it is so difficult Versus, you know, for example,
• 161:00 - 161:30 in China, everything's all located within 50 mi radius of Shenzhen, right? For case, metal, plastic, glasses, even packaging, it's all in the area. There's one street I was on in Shenzhen where it was literally like the the cardboard box factory, the glass factory, the capacitor factory, and what the company we visited uses all the factories on that street and they just drive them to each other. So, and and this owners, they all know each other. And once you give in your your I guess your target
• 161:30 - 162:00 prices then they all sit down together how much you can chip in how much you ship in how much you can work with let's all sit down you know I probably want just be f $80 you know how much you can you know they it's almost like a family right it's very difficult to have that here in the US it'll probably take years to develop into that it takes and I heard news you didn't film this I heard this the uh I think it takes takes overall for our country is minimum 15 years to bring factories back and it's
• 162:00 - 162:30 going to cost our country more than 20 to$25 trillion dollars just to bring everything back here so almost I don't want to use the word mission impossible but that's right that's the task challenge we would face if everything built here in yeah and consumers would have to start with yeah accepting a higher price yeah way way way higher prices Right. Uh, will tariffs affect consumer prices? I think at least I I can't speak
• 162:30 - 163:00 for the broad consumer, but I I think at least for us, we're trying our best. Uh, just like I said, we have different vendors to work with and try to negotiate the best pricing so that we're not, you know, passing too big of a price increase to the customers, right? Um but sometimes you know with things changing by to Darren's point by the hour we have to make quick decisions on you know securing supply so that we actually have something to sell to the customer and sometimes um because of the
• 163:00 - 163:30 time crunch that we're working with we do have to purchase sometimes you know products that are sold to us at a higher cost and you know we'll try our best to absorb most of it but at certain times these unfortunately do have to get passed on to a consumer a little bit uh one good example and this was just being discussed with myself and Durham uh before the before the meeting was for example cases right unfortunately right at this moment um some of our cases are still coming out of China and that at the current moment is being tagged on
• 163:30 - 164:00 145%. We do have, you know, containers on the way which, you know, we can't turn back already and we're going to get tagged on the, you know, based on what we know, 145%. But, uh, we're trying our best not to just, let's say our case is $50 to increase it by 145%. Right? We'll increase it a tiny bit, but rest of it we're we're going to try to absorb the cost ourselves, right? Yeah. I mean, if you have higher cost from tariffs,
• 164:00 - 164:30 uh, does that then potentially impact your order volume? Absolutely. And if it impacts your order volume, then does it also affect your economies of scale and your price per unit? Yes. Um, so at the end of every year, we'll have a business plan for following year. Mhm. So every business union will submit their plan. Then we add them up together and we cut them by quarter and we send out a forecast all the suppliers and with a dollar volume. So if let's say dollar volume stays the
• 164:30 - 165:00 same but your cost increases that your economy scales and your quantity is just going to drop. So that might impact all overall quantities. So, and then just for people at home, I mean that does that impact the average cost of the unit typically? Yes, the increase average cost per units um increase cost everything associates potentially pass on to the uh end users if average cost.
• 165:00 - 165:30 So tariffs, as I understand it, depending on which tariff it is, can be applied against the cost of the item, like to actually make it. Uh, feel free to correct me if that's wrong, but um, so if it's applied against the cost of the item and your cost goes up because your volume went down, then we're eating more tariff. Yeah. So then then the multiplier from the tariff is now multiplied against So if you paid $3 more per unit because you ordered a,000
• 165:30 - 166:00 fewer units. Correct. Right. Yeah, the tariff is now applying against that $3 increase as well. Is that accurate? Uh yeah, according to what you say, this is how we we understand it as well. Yeah. Um so yeah, whether you pass on the user or we absorb those costs, right? Right. But if it's like 100% and you pay $3 more now is like Yeah. $6 more. Right. this this like it seems like it it's it's like um snowball effect. Correct.
• 166:00 - 166:30 Yeah. So, okay. And then by the way tariff we had to prepay those we had to prepay also create our cash flow burdens right for the finance team. So we probably potentially need to borrow more money from the bank to operate business increase interest increase everything else like you said snowball effect right? Yeah. Yeah. What? So what do you what do you do? You gota pay them you know like you can't abandon the container. You can do that but there's
• 166:30 - 167:00 potential lawsuit. Right. But it took me 25 years to build the relationship entire supply chain. I I I don't want to ruin my credibility. Right. Right. Because credibility means almost everything for us. Right. For the entire supply chain just got to eat the cost. Pay pay the bill man. Um, in in your guys's opinion, what do you think is the the biggest problem or challenge with how these tariffs are being rolled out? Forecast change. The entire dynamic
• 167:00 - 167:30 during business changes, you know, they change on daily basis. I think it's just like there's no consistency, you know, at in one day, for example, last week, right? Like on Wednesday, we were, you know, preparing that, hey, China is going to be tagged on with the 54% um tariff. you know Vietnam like 46 or something% and then you know just within one week period of time it could go you know the whole other direction right now and now that we're getting the 90day
• 167:30 - 168:00 extensions right so I think it's just there's no consistency and it makes planning really hard although we pride ourselves in the flexibility that we have right we do you know grab from all these vendors and they're very quick to return like these products to us but you know for example some of the stuff that are coming from oversee cases, you know, keyboard, right? That takes long-term planning, right? Like three month, even sometimes even longer forecast to give to the customer. And when things are changing that quick, we're not able to
• 168:00 - 168:30 react fast enough or tell our um vendors to react fast enough to right. Yeah. Um do you think this affects uh jobs in the US internationally? You know, what do you think sort of the economic impact is? Um I can Now I don't know much about other countries but for sure here in the US and probably China the small to midsize business will definitely impact. Mhm. Yeah. You know, like like we mentioned,
• 168:30 - 169:00 we had a forecast earlier, you know, early this year. All the numbers going to change. When something change, then we have to make drastic decisions, right? What's good for the company? Yeah, that's what uh Cooler Master just said as well. Small and medium size. Small medium impact most. Do you think there's can you think of anything positive that could come from this? Nothing that I can think of at this moment. You know, at least we don't maybe long term. that our government sees. But I for doubt I I don't see it
• 169:00 - 169:30 personally. If you had a a message to put out to people who are actually in charge of making decisions like this. I mean is there any one thing you know you could you would ask for? Let's be all friends. Why fight? Right. Right. Humanity. One big family. Right. We can work things out. All right. All right. I guess I think now we're going to move over to uh Jeff and Rob. So, sounds good. Yeah, I
• 169:30 - 170:00 appreciate it. During our trip, one of these changes included headlines about potential exemptions or exceptions coming in. Headlines led viewers emailing us to believe that all PC hardware would be exempt. And so, we regrouped with Rob Teller of Height one last time to learn more about this. We'll note too that just a day or two after the secondary meeting, the White House posted that exemptions or exceptions would either not exist or would exist for a limited time in some capacity, changing it again. So, this
• 170:00 - 170:30 meeting happened after the exemptions were announced, but before the potential lack of them was announced. All right, so somewhere around like 12 hours ago. This is one day later for people watching. So, there's exemptions of some kind and uh that changes a lot of things we were talking about. It doesn't. It doesn't. What is your reaction to what's happened overnight? Um there's some relief but even that
• 170:30 - 171:00 relief feels artificial because the tariffs for us on say cases have gone from 155% to 30%. And it's only for cases doesn't cover liquid coolers. Liquid coolers are still full reciprocal tariffs. So what are those 155 plus the aluminum tariffs? So the liquid's not excluded. Yeah. And we're still trying to understand the
• 171:00 - 171:30 technicals around air cooling, but uh power supplies also are not included in the exemptions. Correct. Meaning they're at the full tariff. Correct. What's frustrating about this is a lot of people are going to hear about this exemption, especially end users, and be like, "It's over. It's over. What What is height complaining about? Why Why are you guys so upset? The 155% is gone." But it's only gone really for cases and specific components, not including liquid coolers, not including power
• 171:30 - 172:00 supplies. And on top of that, as we broke down our pricing before, these 30% tariffs still require a re uh an increase in MSRP, which means that if we sell into retail, we're making zero money. And somehow retail is still making more money than us. And they're making more money than they would have before the tariffs. Well, what's interesting to me is that with the exemptions being in the news, the headline's going to be PC components get
• 172:00 - 172:30 exemptions. Yeah. And what's not shown in that, it sounds like, is, and I haven't read up on it, so I don't know [ __ ] about [ __ ] but it sounds like so like power supplies are not exempt. I need that to go in. It'll go in. She'll be the next shirt. And uh so yeah, if you have power supplies not exempt and so if you guys sell a component that's not exempt like a liquid cooler and you adjust the price for it or you sell a case that's exempt but is at a 30% and you increase the price. I guess the
• 172:30 - 173:00 concern would be that the the wide uh the consumer base in general thinks that the companies are ripping them off uh because they think that they are exempt from all tariffs. Now I think it's that that headline that's the problem. There's going to be an interesting thing to happen. So like we were we were running the numbers on like what is our ratio of core business
• 173:00 - 173:30 our height.com business that's that's where we sell the products directly and we we make the most margin on it what's the percent the the ratio of that business versus retail business Amazon Best Buy MicroEnter when we distribute those products out to retailers and they take their retail cut and for height it's about one to six that We we do six times more volume uh with retail than we do core site. But we looked at the profit that we make and the profit is
• 173:30 - 174:00 actually 1 to three. So we do six times the volume but we only do three times the total margin dollars and that was before tariffs. Now post tariffs it actually ends up being closer to like 1 to 1.5. Might as well just sell only on your site. we might as well focus on just trying to sell on our website where we can keep our prices the lowest that we can afford to fund the services um and the the quality of experience that we we we're backing our brand by. Um, if
• 174:00 - 174:30 if I only sell on core, maybe I'm selling, let's say, 70% less product, but I might be making the same amount of money as I am in current tariff situations, but I have to service six times the amount of customers, customer service, answering questions, putting out content, market, marketing, customer acquisitions. We would be paying customer acquisition fees to get customers to buy our product when they go to retailers and we make almost no money on that. Yeah. Okay. So,
• 174:30 - 175:00 so the calculations you're losing more money than it even looks like just in the margin. Yeah. Okay. So, um when people ask me about these exceptions, this is what runs through my mind because it's not over. The the situation has not been finished even though there's maybe a oneline title that says it's over. Uh and people have these expectations. I think that's really the takeaway for me is that, you know, I saw that what I forget who it was, but the headline was PC components are exempt. And I'm wondering from you that that
• 175:00 - 175:30 doesn't sound like it's even entirely true. Yeah. And but how many other people think PC components exempt? You see prices go up and it's going to be what the [ __ ] I thought they were exempt. Why is he increasing the price on its liquid cooler? Yeah. Or why can't I find height products? height must have done something wrong. Um it the the next or any company it's going to be the same for everyone because the breaking point will be when retailers have empty shelves. Do you
• 175:30 - 176:00 think it'll change again? Is it still un just as unpredictable as it was yesterday? I I don't think so. I think that these exemptions probably come by in one pass and they're probably in place for for a bit. because what it takes to convince the people in power to make these exemptions um I'm sure doesn't come easy for for that type of influence. Uh I
• 176:00 - 176:30 think there was a giant dinner a couple days ago. There was million million dollar plate Jensen Hong was at that dinner. I can't imagine that's a coincidence. Um but I also can't imagine that after a dinner like that you would flip-flop on Jensen Hong. Mhm. So I I think this is going to be the way it is for a bit. Jensen has an unbelievable amount of power. Yeah. And I I think it's under represented in the wider world. We know it. Yeah. In the computer industry, but
• 176:30 - 177:00 Yeah. Interesting. Okay. So, problem not solved. Problem not solved. Mission not successful. Right. In just days after this comment, the US did flip on Nvidia. After the dinner with Juan, the rumor was that the H20 AIGPU sales ban to China would be dissolved. Then days later, the US maintained its ban on the H20 AIGPUs and then further posted that exemptions may not persist. There have been other updates since all this as well, such as
• 177:00 - 177:30 discussion of additional port fees for docking vessels, China vowing to retaliate against countries following the US's direction, and so-called customs glitches disrupting importers. The story continues to evolve and will likely continue to do so for a long time. We'll keep covering it and its impact on the computer hardware industry, positive or negative, as things develop further. Most of this can be found in our ongoing hardware news series. But if anything major happens, we'll do another thing like this and
• 177:30 - 178:00 regroup with as many people as we can to talk about what's going on and try to learn their perspectives. As a final reminder, just a request that you directly support this kind of content. We had to pause production of almost all other content for about two weeks to get this done. We feel the story is interesting. We can learn a lot from it. It's not something we normally cover and we have a new perspective now. So, this kind of stuff is worth doing. But to continue enabling it and making sure that we can put up all the money for all the travel ourselves because we only fund our own travel, head over to store.gamersex.net net and grab some of
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