Author: Tom Nardi / Source: Hackaday
Despite the fact that the United States and China are currently in the middle of a 90-day “cease fire” in their ongoing trade war, with new tariffs on hold until March 2019 while the two countries try to reach agreement, not everyone is waiting around to see who comes out on top.
In a recent press release, action camera manufacturer GoPro has announced their intention to move some production out of China in the face of potential tariff expansions; which many analysts fear will be the result of the current stalemate. That’s right, only some of their production is moving.“We’re proactively addressing tariff concerns by moving most of our US-bound camera production out of China,” says GoPro CFO Brian McGee. “We believe this diversified approach to production can benefit our business regardless of tariff implications.” Reading his words carefully, the key phrase here is “diversified approach”. GoPro doesn’t intend to move their entire production capability out of China, but only the production of the cameras which are designated for importation into the United States. GoPro models which are to be sold to other parts of the world will still be made in China.
This might seem an extravagant move just to avoid US tariffs, but with better than 40% of GoPro’s revenue for the third quarter of 2018 coming from the Americas, the company stands to be hit hard by the proposed 25% tax. Combined with the fact they shuttered their drone division last year citing “an extremely competitive aerial market”, and the proliferation of “GoPro clones” available for pennies on the dollar, it seems pretty clear that belt-tightening is the name of the game for the company that was once synonymous with action cameras.
Sidestepping a Trade War
The current Administration of the United States has made combating what it sees as unfair practices and intellectual property theft by Chinese companies a top priority, and as a punitive measure has enacted significant import taxes on many products. Additionally these taxes are seen as a way to help domestic manufacturers remain competitive with Chinese imported goods, which historically have been available at a much lower price to consumers. These actions are predicated on a theory that a high enough tariff on Chinese-made products could lead to a resurgence of American manufacturing.
A side effect of these policies is that since individual components (LEDs, transistors, capacitors, etc) are subject to increased import taxes, even manufacturers who are building their products in the United States are impacted. It’s not as if US manufacturers can simply flip a switch and stop purchasing imported parts, the reality is that it will take time and capital to ramp up domestic production of these components. Even products which have remained proudly made in America will almost…
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