Zoë Schiffer: I understand, OK. Obviously, for logistical reasons, this makes sense. It is easier to add tariffs only than to increase the price of a single item. But is it also a clever way to put pressure on the Trump administration, or am I over-explaining things?
Louise Matsakis: I don’t think you are. I think it conveys a very clear political message. These allegations are because your country is experiencing these very high tariffs. I think this is definitely a subtle message these companies are sending. I think Temu is especially a mystery. They have no lobbyists on Capitol Hill. If I respond to media requests from journalists like me, they rarely do. It’s interesting that I think in this case I think doing something politically savvy, and for the most part they either stay silent or policy decisions seem a bit accidental.
Zoë Schiffer: Like you said, at least for Temu and Shein, it’s an order item. At present, we have not seen that the prices of individual items have indeed changed. But is this comprehensive, or is it something we should worry about?
Louise Matsakis: The type of project you should be aware of is something that can’t be made anywhere else. That’s electronics, anything plastic. Parents have a lot of things. Strollers, baby equipment, baby toys, baby clothes, all of these things are almost entirely made in China. These are also product categories, and the margin is already thin, so there is not much room for swing for manufacturers or American brands themselves. These items are usually already between $10 and $30.
Zoë Schiffer: Yes, OK. Well, I won’t explode and let you talk about what you’ve been in stock recently.
Louise Matsakis: I’m happy to share with our dear readers that the other day I sent Zoë a horrifying photo of an ungodly makeup sponge I ordered on Temu the other day because I refused to go back to spend, and anyway, Sephora charges $11.
Zoë Schiffer: 100%. It’s a little bit of a hub, but I think what you’re talking about with me is that it’s not as simple as opening a production facility in the United States. There are a lot of things in China that dominate this space. I wonder if you can talk about us briefly?
Louise Matsakis: I think all of this work left the United States and when China joined the World Trade Organization at the turn of the century, they went to China. But it’s a very simple narrative. The reality is that 20 years ago, many of the products we were talking about now, makeup sponges, iPhones, small electronics, the insulated Stanley Cup I am looking for on the table now, and these products don’t actually exist. These supply chains did not appear to have been transferred from the United States to China, but were built entirely from the Chinese ground. This includes things like machinery. How do you do injection molding to get this plastic cup out of the mold? These machines are built, designed, manufactured and maintained from China. Moving the entire supply chain to the United States is really difficult. In China, the government has organized completely around supporting this type of business. In the United States, we just don’t have any infrastructure, no matter the most basic thing. Roads, ports, land that can be used to open giant factories, talent pipelines. We don’t have high school, you can go here to become a clothing worker, which is very common in China.
