Truth on Tariffs

Read our update below

At JLab we strive to be honest and upfront with our customers – which is why we want to give you all the information on what is going on with the proposed tariffs on goods from China. Today and tomorrow we’re testing the effect of two days of 25% tariffs on the US consumer – so we’re charging 25% more. This will be the pricing we charge starting in July if tariffs are enacted.

What’s a tariff

A tariff is a tax imposed by one country on the goods and services imported from another country. The importer of the goods pays the tariff and generally passes the increase in cost to the US consumer. It is misleading to suggest that the exporting country pays the price of tariffs - they don’t -  ultimately YOU, the US consumer pays the price. The current US Administration has proposed adding a 25% tariffs on headphones, which are produced in China, and the decision to enact the tariffs is about a month away.

It’s important to note that 100% of JLab products are designed, tested, re-designed and tested again, in-house in California and those designs are then shared with our factory partners in China. These factory partners work with our US team to mass-produce our earbuds, headphones, and speakers. All other elements of JLab’s business – sales, support, marketing, accounting, back office, shipping , receiving, operations, purchasing, and design – are based all based in the US.  The relationships we have with our factory partners in China have evolved over years and have helped JLab grow from 4 people just 6 years ago to a group of almost 50.

Here’s some general pros and cons of tariffs:

Pros of Tariffs
  • Raise government revenue via taxes on US businesses
  • Protect domestic industries
  • Exert political leverage over another country
Cons of Tariffs
  • Increased prices for domestic consumers-make domestic industries less efficient
  • Stifle innovation
  • Trade war: an attempt to pressure a rival country by using tariffs can devolve into an unproductive cycle of retaliation

 

Proposed Tariffs: what is being proposed

JLab strives to keep our prices competitive and give customers the most for their money – but a tariff takes away from JLab’s ability to offer these competitive prices. Here’s an example of what price customers would pay on a 25% tariff.

Before tariffs: $10

It costs JLab $7.50 to make a product in China. We charge a margin of 25% for example, making the price for a consumer $10.00.

After 25% tariffs: $12.50

It costs JLab $7.50 to make a product in China and then get charged 25% tariffs on this so it now costs JLab about $10.00. We charge a margin of 25%, making the price for a consumer $12.50.

Today and tomorrow we’re testing the effect of two days of 25% tariffs on the US consumer – so we’re charging 25% more. This will be the pricing we charge starting in July if tariffs are enacted.

Want to learn more about tariffs? Here’s some more resources:

  •  CNBC: Increasing tariffs on China will likely hurt US growth, says Nomura
  •  NPR: More Tariffs On China, More Head Scratching From Economists
  • USA Today: Here are 5 steps China could take to hurt the US beyond more tariffs
  • Fox News:  US to slap tariffs on $200B in Chinese goods, WH says, but trade talks to resume Friday

Comments and questions welcome below also.

UPDATE: 

Thank you to the customers who read and participated with both sympathetic and differing comments on our Tariff Truths blog. Tariffs are not an easy topic – but one that will certainly affect us all especially if enacted. We encourage you to read the blog if you have questions on tariffs.

First, know that all customers who were charged 25% more on Thursday and Friday as part of the 2-day tariff test will automatically be refunded the 25% increased price. You’ll see this refund hit by the end of next week.

Second, our website has returned to original prices as before the two-day test. If tariffs are enacted, which we anticipate being announced in July, this pricing could change. Enjoy tariff-free pricing for now both at jlabaudio.com and at retail.

Our CEO shared some additional insights:

“This is more than just a test, rather it’s an opportunity to create awareness about what could be coming if enacted. This is not about politics - rather about communicating what's coming. I've spent the past 12 months - and years prior - trying to figure this out. The supply chain to build products such as this doesn’t exist in America. I wish it did. This said the US job market is the best it’s ever been - EVER! We're the only country in the world to have successfully transitioned our economy. We should be proud of that fact.”

- Win Cramer, JLab CEO

Thank you,

Team JLab


8 Responses

Edmond Pang
Edmond Pang

May 31, 2019

Why not consider selling your products worldwide? Then you can deliver your products from China to customers except US customers.

Catherine
Catherine

May 31, 2019

China has taken advantage of us for too long. I for one don’t mind paying a few extra dollars for products made in the USA. My husband and I look for products made in the USA before buying or in this case a primarily US company. I think tariffs in general are bad policy, but with China…enough is enough. Let’s start moving to manufacture the components here. Looking forward to getting my recently ordered earbuds!

Win Cramer
Win Cramer

May 30, 2019

Trying to address some things and will do so throughout the day:
Tom Burke: We’d LOVE to build the products in the USA. We’ve worked to find factories that can scale at our volume and unfortunately, this point, they dont exist. The sophistication of the Chinese supply chain is often misunderstood. Could we “assemble” in the USA? you bet. This said, we’d still pay import duties on all the “parts” brought over from China to do so including the semiconductors (bluetooth) and the L-Ion batteries. There aren’t US sources for these products today.

Brooks: Agree that the test is a bit jaded – and this is more than just a test, rather its an opportunity to create awareness about what could be coming if enacted.

Richard: unsure of your thought here. If we are to maintain the same margin % (which our lenders/credit facility HEAVILY evaluate) we would be forced to pass the full 25% through to the consumer. $10 MSRP then becomes $12.5 if JLab is to maintain the same % of profitability.

Rob
Rob

May 30, 2019

Thank you for raising awareness about this terrible policy decision that will only hurt US consumers.

James Grammer
James Grammer

May 30, 2019

I think the unbiased information is great. I thought this was very well done, especially including the pros of tariffs and not just the cons.

Richard Rizzo
Richard Rizzo

May 30, 2019

Your math is wrong for the price of goods before tarrifs

Brooks
Brooks

May 30, 2019

Seriously? That’s obviously a flagrantly flawed “test.” Clearly if people know prices will go right back down in two days they’ll wait two days to buy.

If you want to speak out against tariffs that’s fine, but this little gimmick is an insult to the intelligence of anyone with an IQ above 100.

Tom Burke
Tom Burke

May 30, 2019

Maybe we should be manufacturing these products in our own country! We’ve been owned by China for too long!! I have the air buds and there great! They would be even better if they were made in the great U.S.A.!!

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