Small U.S. town, big company. Can it weather the tariff Blizzard? (Digi-Key) (2025)
npr.org57 points by upofadown 10 hours ago
57 points by upofadown 10 hours ago
I've only seen a small portion of the chaos from my side of the market, but that's been chaotic enough.
All of this chaos has actually slowed down our US manufacturing buildout. We'd like to build US factories, but we're having to slow them because of the uncertainty. A foreign factory only has the uncertainty on the US import/export, while a US factory has uncertainty on all imports/exports.
Anecdotes are not data, so here's some data:
https://fred.stlouisfed.org/series/C307RC1Q027SBEA
US Factory build out investment increased from $80B/year to $240B/year under Biden.
Trump's economic policy has managed to undo $30B of that so far, and the trend is accelerating.
It's hard to overstate how screwed hardware design and prototyping would be if companies like digi-key went under. There's only a few electronics distributors like them around and most of them are centered in the US.
If we lost Digikey, Mouser, and AVNET, it would be catastrophic. Entire US engineering divisions would leave for Shenzhen.
What about farnell and arrow?
Be careful with Arrow. They like to ask what you're working on and if they discover an opportunity to bid on the same work they'll undercut you.
When I order from Mouser (a Digi-key competitor based in Dallas) they plainly charge a 10-15% tariff fee. I'm struggling to understand why this solution isn't obvious. You have to pass the cost onto the consumer, or your margins dwindle. It's trivial math.
> People are also having to intervene in once-automated tasks. Thousands of orders that used to auto-flow directly to the warehouse floor for same-day shipping now often miscalculate tariff costs.
Charge a blanket tariff fee like Mouser.
I worked at Mouser as an engineer for a few years. This included work on the service that charges this blanket tariff rate, which includes incredibly complex business logic that ended up taking half the year to make. and that was with upper management pushing us very hard to get it done. Digi key from what i understood is a smaller company that lacks the ability the capacity to get something like this done as fast. or at least thats my best guess. Mouser knew the obstacles digi key dealt with when it came to things like capacity, storage, and developer power. I remember the discussions about how we could "beat" them out in sales revenue and why we were more "bulletproof" in the way we did business.
Can't Digikey simply charge a say 25% premium? Would that push them out of the market, considering demand is still high.
If Digikey consistently charged 10% more than Mouser, yeah that would absolutely ruin them. Digikey and Mouser don't have much to distinguish them already. It's like Aldi vs Lidl.
> > People are also having to intervene in once-automated tasks. Thousands of orders that used to auto-flow directly to the warehouse floor for same-day shipping now often miscalculate tariff costs.
> Charge a blanket tariff fee like Mouser.
The importer still needs to pay the correct tariff.
Also, according to the article, a big part of the problem for is that Digi-Key does substantial business selling imported parts to non-US buyers. It’s fantastic for the US that this business can exist (money flows into the US and actual good jobs are created), but the tariff system makes is difficult to run this part of the business and there’s a lot of pressure to move those jobs and the revenue to a different country that doesn’t have this problem.
Yeah that’s what I thought too. I think people are find with some 50-100% hike of prices on ham radios, oscilloscopes, and even phones, if local production starts to appear.
You can buy US manufactured oscilloscopes from keysight. A 50% price hike on one of them is enough money to buy a new car, with enough left over for a few months of bay area rent. There are much better uses for that money than throwing it into the money furnace of tariffs, like paying employees or buying half a dozen lower-end scopes manufactured in Asia.
If customers can afford a 50% price hike on lower end oscilloscopes, would that create a small domestic market? Like, I don’t really mind spending an extra 200 bucks on a 200 buck oscilloscope, or even an extra 300 bucks.
The comment you're responding to was literally pointing at the actual magnitude of prices for scopes that are merely US-branded. And for the lower end models you're talking about, they're not even anywhere near "Made in the US from US components". Siglent or Rigol are not going to be setting up manufacturing in the US to avoid tariff rates on finished products, and they certainly aren't going to do it when the inputs would be subject to tariffs as well.
Your comments in this thread basically come across like you just read an economics 101 textbook and are now asking leading questions to continue your study. In reality, markets are computationally hard and path/structure dependent. Merely tweaking a few knobs to increase some incentive won't make something magically spring into existence. A lot of market "proponents" ironically miss this - if markets were not computationally hard, then centralized planning would also work!
What lol no they’re not.
None of those benefits of a price hike go to American workers. They get low wage factory jobs, not old school pension jobs, and all their stuff goes up in price?
Laughable. I doubt Americans won’t even pay 5% more to get stuff made in the USA.
Ah OK, so when do we see production coming back to North America? On the other hand, didn't TMSC and other manufacturers plan to open a few spots in the US?
You don’t. Not with current lifestyles and general way of life people alive today would recognize at least.
I lived through Walmart systemically walking through the Midwest and destroying every bit of competition in its path. People looooooved to talk about how other people should “just pay $5 more!” to a local retailer and stuff made in the USA. But it was always for other people to do. Never underestimate the American consumers cheapness. If they can get more junk for less, they will do so nearly every time.
And this was in an era when there was still a large amount of manufacturing done in the US. The costs would no longer just be a minor 20% discount - they would be multiples since we lost both the capital investment in equipment and factories, the supply chains feeding them, and would have to spend a generation training up current high schoolers into skilled and semi-skilled manufacturing labor. Assuming anyone actually is willing to do those jobs these days.
Buying local became something for performative rich folks to do. Everyone else excused themselves due to “need” of some sort. Consumer preference was revealed and catered to - and now without severe great depression level pain it’s not coming back.
Perhaps after the incompetent performative fascists are evicted, all of the structure fires they wantonly started have been put out, and there is some halfway-competent administration that appreciates the scale of the problem we are dealing with.
Tariffs would have helped 20 years ago, but here they're basically just a wistful dementia echo of something that could have been. Applying a policy that's decades out of date merely further strangles American industry. This article is a great example if you actually examine the details of the situation - Digikey is an input to the types of domestic manufacturing that actually employs labor, yet blanket tariffs simply make them even less competitive.
Mouser has become unreliable. Most of the analog parts we've ordered get cancelled and customer service has no clue why.
Just once I managed to get to some kind of manager who told me point blank "we won't sell this part to startups."
I worked at Mouser as a developer for a few years, the real reason is because our parts are used by terrorists, etc. to build weapons that kill people/bombs.
We created a service that blocks people from buying various parts using a ton of different complex business rules (one simple rule we had was we straight up didn't sell ANYTHING to the middle east for a while).
Startups were another business we didn't sell to simply because of the sheer amount of fake companies we got trying to work around our rules engine.
Alot of the rules for our service was mandated from the FBI. That was a fun call to reveive from them.
It seems that no one ever mentions that every dollar given up to tariffs is that much less for growing staff, equipment, facility and R&D expansion. It's literally a drag on the entire GDP and ecomomic growth.
More subtle is that every dollar saved in buying components from China is more money for all of the forementioned.
Lol DigiKey has been itemizing tariffs for years. They're not "giving up" any money; it's literally an extra line item on your invoice.
For the same reason when small local businesses charge you a 3% service fee to use credit; they're not giving up that money because you wouldn't have been charged it otherwise.
If you read the article, you'll see the paragraphs about all the paperwork to set up a FTZ, the delays in fixing broken/changing tariff calculations, and the fact that some of the other parties involved simply aren't paying their share of the costs. All of those affect digikey's costs.
The parent's point also applies to the companies buying product. Every dollar they spend on tariff line items is another dollar they're not sending back into the economy via expansion and wages.
As someone who builds apps with zero marginal distribution costs, the sheer friction of hardware logistics is terrifying. Digi-Key basically operates as a massive physical API for components, but unlike pulling a package from NPM, an arbitrary tariff can instantly invert their unit economics. It really puts indie developer complaints about Apple's platform cut into perspective when physical supply chains are this vulnerable to sudden geopolitical tax shocks.
If only the people responsible for the tariffs, who miss no chance to (miss)quote Reagan, would take the time to listen to his actual words regarding tariffs https://www.youtube.com/watch?v=5t5QK03KXPc
I remember ordering parts from Digi-Key in 1980 or so when I was in high school. The catalog was less than 1/4 inch thick, and listed various surplus things on the back.
It was cool to see them grow into a real competitor for the big distributors.
Should note that this article is from April 2025. Digikey sruvives and the tariffs are supposed to be refunded.
Even if tariffs are refunded at some point, the cost of implementing and managing the tariffs, list sales, lost opportunities and so on are not. Nor is the cost of recovering the tariffs from the government.
Credit card and banks should be able to manage the transactions, they keep records for years. If they were smart, they'd be pushing to get the deal and a massive fee
Neither bank nor credit card companies can possibly manage the tariff question for any party. Tariffs get charged on the goods that you import and depend on what specifically you import. Banks manage the financial transaction, but have no specific knowledge what goods you're paying for and at what rate they are subject to tariffs or taxes.
The supreme court overturned the emergency act tariffs, but trump immediately used another statute to re-instate tariffs (effective for six months, anyway).
For china, the supreme court ruling was effectively a 5% reduction in tariffs. The situation remains dumb.
https://www.china-briefing.com/news/us-china-tariff-rates-20... (Url says 2025 but has been updated continuously)
Does North America have some supply of those electronics components, or are we totally depending on Asian producers? I assume if prices hike up it will improve local production — or it was suggested since the introduction of more tariffs.
Anyone who works in the semi industry has been hearing management try to be politically correct when trying to explain how badly tariffs are screwing everyone over every quarter. Tying themselves in knots to avoid saying how idiotic the trump administration is. And here we are trying to wait him out until the us gets a president with a brain. Good luck I hope all can outlast this.