Independent Report – Plufl co-founders Yuki Kinoshita and Noah Silverman initially planned to manufacture their “dog beds for humans” in China and sell them in the U.S. for $299. After securing investment on Shark Tank, the company saw strong sales. But a steep tariffs on Chinese imports forced them to reconsider their production strategy.
However, the business landscape changed dramatically when U.S. President Donald Trump imposed a steep 145% tariff on goods imported from China in April. This tariff forced Kinoshita and Silverman to reconsider their manufacturing strategy. They explored the possibility of producing a “Made in the USA” version of their beds to appeal to retailers. Who were concerned about tariff impacts and to offer a product that could justify a higher price due to its origin.
The duo discovered a factory in Las Vegas that could produce the beds for $150 per unit. While this was higher than the $100 cost of manufacturing in China, the U.S. facility’s price did not include the faux fur lining. Which still had to be imported from China at an additional $100 per unit. This increased cost made the beds much more expensive, with a retail price potentially exceeding $500. Despite pitching this American-made product to Costco, the retailer declined to stock it for the year. Though they might reconsider in the future.
Plufl’s experience reflects the difficult decisions many small and medium-sized American manufacturers face today. They must choose between paying high tariffs on imported Chinese goods or bearing significantly higher costs to produce domestically. Even companies willing to raise prices for domestic production find that retailers rarely allow price increases. Limiting manufacturers’ ability to offset higher costs.
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In June, when the tariffs on Chinese goods were reduced from 145% to 55%. Kinoshita and Silverman decided to keep manufacturing in China and maintain their $299 price point. To cope with the tariff-related expenses, they are finding ways to reduce costs. Such as optimizing packaging to save on shipping and accepting thinner profit margins.
The challenges posed by tariffs extend beyond Plufl. Aisha Chottani, founder and CEO of Moment, a company producing healthy, carbonated beverages in Wisconsin, faced similar issues. While Moment produces its drinks domestically, the cans are made from pre-formed aluminum imported from China. Which is subject to a 20% tariff. This increased the cost of cans, but when Chottani tried to raise wholesale prices to retailers like Albertsons, they refused to accept any price hikes. Faced with this, she had to absorb the higher costs and look for ways to cut expenses and raise capital to survive.
The impact of tariffs also affects larger, established companies. Bugaboo, a Dutch maker of high-end baby strollers, manufactures most of its products at its factory in Xiamen, China. When tariffs were introduced, Bugaboo reconsidered its production strategy, exploring options for regional manufacturing in Asia and potentially the U.S. However, setting up operations in the U.S. would take several years and require specialized manufacturing capabilities and skilled labor that are currently lacking. For the time being, Bugaboo chose to pass some of the tariff costs on to customers. Raising prices on various products by $50 to $300. The company continues to absorb part of the expenses to minimize the burden on families and retailers.
Similarly, Simplified, a Florida-based company specializing in high-end notebooks and stationery, faces challenges with tariffs. CEO Emily Ley explained that producing their planners in the U.S. would be much more expensive—around $38 per unit compared to $12 in China—and even then, the materials would be of lower quality. Since their planners retail for $64, passing on the tariff costs would push prices too high for customers, making the product uncompetitive. As a result, Ley is continuing to manufacture in China and absorb the tariff costs, which forces her to reduce spending in other critical areas like growth, staffing, and advertising. She has also filed a lawsuit arguing that the tariffs imposed by the Trump administration were illegal.
These stories highlight a common theme for many American manufacturers today. While tariffs aim to encourage domestic production, they often result in higher costs that are difficult to pass on to consumers due to retail price resistance. This leaves manufacturers caught between rising expenses and limited pricing flexibility, threatening their profitability and growth.
A spokesperson for the White House emphasized that the administration remains committed to revitalizing U.S. manufacturing. New policies, such as those in the recently passed “Big, Beautiful Bill,” aim to support businesses by allowing full expensing of equipment investments and encouraging supply chain growth. However, for many companies, the immediate challenges of tariffs and production costs continue to pose significant obstacles.
In the face of these challenges, many small businesses and startups must make difficult decisions about where and how to produce their goods. While “Made in the USA” remains a powerful marketing label, the reality is that high domestic production costs and ongoing supply chain complexities are forcing many companies to maintain overseas manufacturing, absorb tariff-related expenses, or accept reduced profit margins.
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