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Daily news and analysis about the food tech revolution

tariffs

Tariffs Pushing Consumer Hardware Makers into Crisis Mode

During normal times, running a hardware business is tough. Throw in a tariff-driven trade war, and it becomes a full-blown crisis.

Just ask Robin Liss. When the CEO of kitchen appliance maker Suvie saw that President Trump wasn’t backing down from imposing steep tariffs on products from China and beyond, she realized she’d have to move manufacturing out of China or risk her entire business.

Liss told CNBC she’d need to reconfigure Suvie’s manufacturing and supply chain operations on an accelerated timeline or miss out on her most important sales season in the fall.

From CNBC:

Suvie’s products—kitchen gadgets that can whip up dinner in a matter of minutes—are built in a facility located in one of China’s largest manufacturing hubs and consist of more than 500 components sourced throughout the country.

After running the numbers and calculating the costs associated with the new tariffs, Liss headed to Asia in March in search of a Plan B.

“I’m going to run out of appliances,” Liss said ahead of her two-week trip to Taiwan and Vietnam. “I’ve got to figure this out.”

While tariffs impact nearly any company with a global supply chain, consumer hardware manufacturers—from Apple and Google to Suvie—are especially vulnerable. That’s because most rely on Asian manufacturing after decades of offshoring has hollowed out U.S. manufacturing capacity. Bringing production stateside would require massive cost increases and a multi-year transition at best.

Suvie is just one of many hardware makers now scrambling to rewrite their supply chain playbook in response to the tariffs. The question is: how many can actually make the leap—and survive?

How Tariffs Are Impacting Canadian Food Companies (and What They’re Doing About It)

Last week, I caught up with Dana McCauley, CEO of the Canadian Food Innovation Network (CFIN), to discuss some of the challenges facing Canadian food manufacturers amidst the abrupt and surprisingly hostile stance taken by the Trump administration towards our northern neighbors.

CFIN is a national organization dedicated to helping Canadian food and beverage businesses enhance productivity, competitiveness, and economic potential through innovation and technology adoption, and in her position as president of the organization, McCauley had a bird’s eye view on how the Canadian food companies are navigating considerable uncertainty due to shifts in trade policies, tariffs, and antagonistic rhetoric from the U.S. administration

We discussed the disruption caused by sudden policy reversals on trade agreements previously established between Canada and the U.S., and what the imposition of tariffs has meant to Canadian food companies. According to McCauley, the uncertainty forces Canadian food companies to spend extensive resources on scenario planning, detracting from productivity and innovation. McCauley pointed out that these issues are magnified in the food business compared to other industries because of the food’s unique constraints compared to other sectors, such as limited shelf life.

Another struggle for Canadian food manufacturers under the new reality is figuring out how to move forward in a business that often involves complex products that historically have integrated cross-border ingredient lists. McCauley shared the example of organic dairy products, which traditionally have included American-sourced dairy components for value-added products. McCauley said that rising tariffs and trade barriers now render these business models economically unsustainable, prompting businesses to rethink their strategies drastically.

And then there’s the hostile rhetoric from an administration of a country that Canadians have long-seen as their biggest ally. McCauley has said that the result of this rhetoric has been a strong push among consumers to “buy Canadian”. The shift to Canadian and drop American products has been swift and one has to wonder about the long-term damage that Trump is doing to the American brand in Canada and elsewhere.

I asked McCauley how CFIN is supporting Canadian companies given all the sudden changes, and she said that CFIN is actively supporting Canadian food businesses through this volatile period by advocating for enhanced domestic innovation and accelerated regulatory approvals for low-risk food technologies. She emphasized the urgency for Canadian food manufacturers to diversify markets, embrace domestic technological solutions, and leverage Canada’s extensive international trade agreements to navigate ongoing trade uncertainties effectively.

We talk about lots more, so you won’t want to miss our conversation. You can listen to my full conversation below or on The Spoon Podcast.

How Tariffs Are Impacting The Canadian Food Industry

June Raising Price of its Smart Oven $100 Because Tariffs

I am an unabashed fan of Kai Ryssdal, host of the public radio show Marketplace. If you’re a listener or follow him on Twitter, you know he’s been saying the trade war President Trump is engaged in with China is actually going to be paid for by American consumers. And this week, we got evidence of that when we learned the tariffs will soon impact the prices of connected kitchen appliances.

Today, June announced that starting July 1, it is raising the price of its smart oven to $699, a $100 increase. In a statement emailed to The Spoon, June CEO, Matt VanHorn said:

As you may have heard, the US recently increased tariffs on imported products manufactured in China. Unfortunately this affects us and we have had to raise our prices by $100, to $699 for the June Oven and $899 for the Gourmet Package. This will take effect on July 1, 2019. We absorbed the first tariff increase last year to minimize customer impact, but for this second increase, we have had to pass along some of this cost to customers.

June’s price increase comes just days after Corelle Brands said that tariffs would force it to raise the price of the wildly popular Instant Pot multi-cooker, from $38 to $187.44. (Though to be fair, I’m not sure there’s a person left in the U.S. who doesn’t have one.)

We had heard off-the-record talk of price increases from food tech execs last year. Now, with no end in site for the tariff tantrum, it looks like those high prices are now a reality.

In addition to established companies, one has to wonder how this could impact the fulfillment of Kickstarter projects, many of whom manufacture their goods in China. Crowdfunded hardware projects have a hard enough time getting to market, and this could be yet another hurdle for those that didn’t budget appropriately.

We’ll be on the lookout for more fallout from the trade war with food tech companies (when we aren’t listening to Marketplace). Drop us a line if you notice tariff-induced price increases, and if you were interested in a June oven, you, uhh, may want to get that order in this weekend.