The tariffs announced by the Trump administration have been an Armageddon across many industries. Here’s what I’ve found from being in the trenches myself.
My small business, San Diego–based Tenikle, sells a product made of consumer-grade silicone. It looks like octopus arms, complete with suction cups, and it can hold up your iPhone any which way. It’s been made in China until now, but due to the tariffs that’s about to change.
Finding a solution to the tariffs has proved to be a daunting and nearly impossible task. It’s been seven years and a modest $24 million in lifetime revenue since I launched Tenikle on Kickstarter, and even snagged a deal with investor Daymond John on Shark Tank.
My business, my tiny team, and my family’s livelihood are all on the edge of collapse if I don’t do something in response to the tariffs.
Rethinking supply chains
Like any problem-solving small-business owner would, I’ve found a solution: bring my manufacturing here to the USA, just as the administration wants. This is a bold move to not only save my business, but also pivot to a new way of thinking about supply chains—and perhaps in the process help save other brands as well.
Countless companies are in the same boat as me, scrambling for a solution. Silicone consumer goods can be found in categories such as infant care (think baby bottle nipples), kitchen utensils (like spatulas and ice cube trays), toys (stacking cups and soft building blocks), fashion and accessories (bracelets, hair ties, iPhone cases), beauty products (lip brushes, makeup sponges), health products (menstrual cups, cushioning inserts), tech-related items (keypads, smartwatch bands), sporting goods (mouthguards, swim caps), and so much more.
Initially, the first thing I did (aside from job hunting) when looking for a new supply chain alternative was what everyone else in the space has been doing en masse. First, I thought, “How can I circumvent these tariffs?” Nope, that’s illegal…“Can I wait it out until the White House magically removes the tariffs?” Unlikely.
What about manufacturing in Vietnam, Malaysia, Mexico, or Thailand? Okay, this is an option, but if I commit to this path, more issues arise, such as logistics, which is a mess. Where do I find these factories? Can I really trust them to deliver and be held accountable on quality control and intellectual property? The timelines for delivery seem way worse. And what about the uncertainty after the 90-day tariff pause is lifted? What if the South China Sea goes into conflict?
It was all too much. So, I started to look at producing here in America.
Problem: The broken state of U.S. manufacturing
What I found is that nearly all of the silicone molding factories in the USA were set up for large-scale industrial contract manufacturing for aerospace, pharmaceutical, defense, automotive, etc., and only one in the nation, as far as I could tell, would produce for consumer goods. This opened the door to a new rabbit hole: What will it take for me to produce here in-house? And why is no one else doing it?
In China, you can source factories with low minimum-order quantities (MOQs), cheap product development, and low-cost items. But manufacturers in the U.S. have been optimized for large, multiyear contracts for high-margin industries. This allowed them to scale their overhead substantially to be able to predictably produce millions of a single part for years to come, which is not conducive to the fast-paced, ever-changing landscape of consumer goods. So that’s one reason no one else is doing it.
Solution: Steal China’s factory model
So, what does it really take to produce here in the USA, and can it be cost-effective? Well, I found something interesting about China’s factories. Most of them, like my own overseas supplier, are small satellite shops with just enough machines to mold the orders they receive. Small, efficient, low overhead, high output, and mostly rudimentary tech. iPhones are a different story, but for the silicone, rubber, and plastic items that fill our shelves, the machinery is super simple to operate. Very automated, very efficient, and low-cost—now this I can do. Decision made. Plan in action.
My new manufacturing startup and its facility (to be located in Riverside County, California) will be copying this Chinese model—essentially replacing the cost, MOQs, and customer experience of working with overseas factories and instead doing it all right here in the USA, with additional benefits unavailable for companies using overseas suppliers.
My startup’s quoting strategy (to steal China’s supply chain) is: “Give us your final landed cost per unit in 2024, including freight and previous 2024 tariffs, and we’ll engineer a plan to match it.”
Misnomer: China’s “cheap labor”
I believe there is another reason no one is manufacturing consumer goods here. Manufacturing in the U.S. has been perceived as an unsexy, dirty industry, with a mental image of sweatshops filled with laborers. This outdated image is ingrained in the American psyche. Certainly, all the items you see on shelves must be made in China or developing nations where labor is cheap, right? Upon some research, you soon realize that China’s manufacturing labor workforce earns much closer to the U.S. worker than one might think.
I turned to ChatGPT Deep Research for a chart showing the average annual wage gap between Chinese and American manufacturing workers over the past 50 years. Here’s what it gave me:
According to these results, China’s manufacturing labor force now earns 31.5% of what the U.S. manufacturing labor force earns in U.S. dollars. In 1995, that number was just 2.5% of what American labor wages were. The reality is Chinese labor is not actually that much cheaper than American labor these days. Plus, many of the items produced are in fact very automated, especially molded goods.
The numbers: U.S. manufacturing can compete
Let’s start with some napkin math for U.S. labor:
6 Units x 60 runs per hour ÷ $36/hr wage = $0.10 labor cost per item
Explained: A 6-cavity mold with a 60-second cycle time can produce 360 units per hour. One machine operator making $36 an hour achieves a per-unit labor cost of $0.10 per unit Cycle two machines side by side (a common practice) and that labor is now $0.05 per unit. Add more cavities to the mold and reduce labor closer to the minimum wage, and you’ll achieve an even lower per-unit labor cost.
After I calculated labor, raw materials cost (one of the globe’s largest suppliers of silicone is based here in the USA), energy usage, and packaging, I found that producing here in the U.S. would actually be much cheaper than what my landed cost of goods sold in 2024 was prior to tariffs. Even when adding in a very healthy margin to the factory for overhead.
Hmmm, okay. Did I just find something no one else was looking at? Perhaps so. I decided to take to X and LinkedIn and announce my plan that I was going to build a small factory here in the USA. The response? Eighteen new contract manufacturing clients reached out, and a slew of private investors expressed intereste in hopping on board in just a few days. “Wow!” I thought, “I have to do this.”
Beyond tariffs: Additional benefits to onshoring
You can’t hedge an entire business model on some unprecedented tariffs. These will most likely go away, or change. But there are more benefits to producing in the U.S. than avoiding tariffs. This is what made me move forward with opening my factory. Among the benefits:
Substantially reduces CO₂ emissions. A single 40-foot container’s round-trip voyage from China to the USA emits 1,000-1,600 kg CO₂. That’s the equivalent of driving about 2,400 miles just to get some stuff to the port of LA, not including the rest of the trip. Now imagine an entire ship’s emissions. The impact is substantial. If we truly care about emissions, manufacturing in our backyard is where we should start.
Onshoring avoids global supply chain volatility. We’ve seen supply chain issues before: COVID-19, a stuck ship blocking the Suez Canal, port strikes, and more. Supply chains overseas will always be a roll of the dice, no matter the country. We can’t predict world events, but we can mitigate supply chains by making stuff in our own backyard.
Achieve faster lead times, dropping freight from 45 days to 10. Right now, it takes on average 45 days for finished goods to arrive in the U.S. Imagine if this was cut down to 10 days. As someone who has paid hundreds of thousands in airfreight to expedite goods from China to the U.S. to meet customer demands, a 10-day delivery to a brand’s distribution center is a godsend. This also improves a company’s cash-conversion cycle as there is less time for cash outlay to receive goods.
Protects against IP theft. The intellectual property issue is a big one. Chinese manufacturers have destroyed American entrepreneurs who have developed novel ideas. And you can’t really sue these Chinese companies for violating our laws. I can’t tell you how many times I’ve seen lesser-quality versions of my patented products floating around e-commerce sites like Temu, Shein, and even Amazon.
“Made in America” retail benefits. Retailers like Walmart have announced expanded “Made in America” initiatives. Any brand that can produce here in the USA will have a much easier time obtaining shelf space than those who will be asking for cost increases to make up for tariffs.
Avoids customs, brokers, and freight forwarding complexity. The cost and complexity of container shipments will continue to fluctuate—and can even increase to COVID levels of $20,000-plus per container when there’s this much uncertainty causing port congestion. Onshoring in the USA removes this cost entirely.
Improved transparency, time zone sync, no Chinese holiday pauses. The pain points for American businesses working with Chinese suppliers are the time differences to be able to meet, the many weeks out of the year that factories shut down (Chinese New Year and other holidays), some minor language barrier issues, and occasionally the ability to get transparency on processes, development, materials, and labor compliance.
Financing benefits. Most lenders in purchase-order financing and lines of credit charge interest from 12% to 24% APR. That’s an entire 1.5% to 3% addition to cost of goods sold for just sitting on the water 45 days. Reducing cash outlay and interest has a benefit most don’t think about when considering a 45-day ship time. Not to mention the lender’s security in knowing funds are being sent to a U.S. entity.
Contributes to U.S. jobs and helps reduce the trade deficit. Adding jobs to the U.S. economy is a good thing. “But who’s gonna do the work?” you might ask. Well, many of the seemingly positive unemployment statistics we see today are skewed by the gig economy, such as Uber, Doordash, etc., and don’t reflect the reality that many Americans are feeling.
Get ready for the robots. Building manufacturing infrastructure here in the U.S. is an existential hedge against becoming obsolete in the era of advanced humanoid robotics. We may still be a decade away, but when you can train a robot like an employee to do assembly line tasks, the countries with the infrastructure in place will have a leg up to compete at scale.
The notion that supply chains for consumer goods must be satisfied overseas is simply not true. And as illustrated above, there are plenty more benefits than just getting around tariffs that will have a lasting and long-term positive impact on the brands that decide to onshore their production to the USA.
A U.S. manufacturing revolution
America already needed a manufacturing renaissance—the tariffs have just kicked it off. The world is changing. The U.S.’s relationship with China has been tainted. AI is taking over roles. The trade deficit and the debt-to-GDP ratio are out of control. Americans need better jobs than dropping off Chipotle orders for Uber Eats. Mass-automation humanoid robots are coming, and the talent pool to compete globally in making high-quality consumer products at scale has dwindled in the U.S. The bet for U.S. manufacturing consumer goods is long term and beneficial.
Opening a U.S. factory—and launching my new startup Stuff MFG to operate it—is my Hail Mary. I may just be some guy who made a squid thingy, but not every brand owner is cut out for this kind of challenge. I don’t have a choice. With no certainty around what’s happening in supply chains, my household’s livelihood, my reputation, and my last dollars are on the line, so I am all in. I will save my brand and any others I possibly can from going under due to the tariffs.
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
Read more:
- The tariff strategy is backfiring and small businesses are the collateral damage
- Some manufacturing jobs will return to America only if AI robots do them—and that’s a good thing
- Americans want more U.S. factory jobs—as long as they don’t have to work them
- USA Brands CEO: Small businesses want to thrive, not just survive. That’s where the tariffs uncertainty hurts the most
