Zoë Schiffer: Got it, OK. Obviously, that makes sense for logistical reasons. It’s easier to just add a tariff charge than raise the price of individual goods. But is it also a way to subtly exert pressure on the Trump Administration, or am I over-interpreting things?
Louise Matsakis: I don’t think that you are. I think it sends a pretty clear political message. That these charges are because your country has these really high tariffs. I think it’s definitely a subtle message that these companies are sending. I think Temu in particular is a mystery. They don’t have any lobbyists on Capitol Hill. They rarely if ever respond to media requests from journalists like me. It’s interesting to see them I think doing something that is politically savvy in this case, whereas most of the time they’re either silent or they’re policy decisions seem a little bit haphazard.
Zoë Schiffer: Like you said, for at least Temu and Shein, it’s a line item right now. We’re not seeing the price of individual goods really change at this point. But is that true across the board, or are there some items in particular that we should be worried about?
Louise Matsakis: The types of items that you should look out for are things that really can’t be made anywhere else. That’s stuff like electronics, anything that’s plastic. A lot of stuff for parents. Strollers, baby gear, baby toys, baby clothes, all of those things are almost entirely made in China. These are also product categories where the margins are already pretty thin, so there’s not that much wiggle room for the manufacturer or the American brand to eat the cost themselves. These are items that are often already somewhere between 10 to $30.
Zoë Schiffer: Right, OK. Well, I won’t put you on blast and make you talk about the things that you’ve stocked up on recently.
Louise Matsakis: I’m happy to share with our dear readers that I sent Zoë a horrifying photo the other day of an ungodly number of makeup sponges that I panic ordered on Temu the other day, because I refuse to go back to spending, whatever, $11 that Sephora charges for one of these.
Zoë Schiffer: 100%. This is a little bit of a pivot, but I feel like you and I have talked a lot about how it’s not as simple as just opening up production facilities in the United States. There’s a lot that goes into China being so dominant in the space. I’m wondering if you can just talk us through that briefly?
Louise Matsakis: I think that there’s this narrative that all these jobs left the United States and they went to China when China joined the World Trade Organization at the turn of the century. But that’s a really simplistic narrative. The reality is that 20 years ago, a lot of the products that we’re talking about right now, makeup sponges, iPhones, small electronics, the insulated Stanley cup that I’m looking at right now on my desk, these products literally did not exist. It’s not as though these supply chains moved from the US to China, it’s that they were built entirely from the ground up in China. That includes things like the machinery. How do you do an injection molding to make this plastic cup out of a mold? Those machines were built, designed, manufactured, and maintained in China from the time that they were invented. It’s really difficult to move that entire supply chain to the US. In China, the government has totally organized itself around supporting this type of enterprise. Where, in the US, we just don’t have any of that infrastructure in place, whether it’s even the most basic things. Roads, ports, land available to open giant factories, talent pipelines. We don’t have a high school you can go to here to become a garment worker, which is a very common thing in China.
