April 12, 2025 tariff update and new price change notification feature

As a small US-based electronics manufacturer, we have been contemplating tariffs a lot this year, especially over the last several weeks, when our mindset changed from primarily “let’s see what happens” to more of “this could be an existential threat and we need to act right away.” Like much of the world, we were shocked by the April 2 announcement of new, and high, US tariffs on seemingly everything from everywhere and the subsequent dramatic escalation of tariffs on China, which are up to 145%, or maybe 170% or 195% on some electronics components, as I write this on Saturday, April 12.

With the various pauses and extensions and exemptions that are announced almost daily, it might seem that the tariffs are just talk, but we have been getting hit by tariffs of 45-70% on electronics components for the past several months already. Often, these are for integrated circuits that we ordered months ago and that can ship from various countries, and we find out about the extra 70% cost only after we receive the parts. This summary from a recent Arrow Electronics order for some stepper motor driver ICs shows Arrow trying to get ahead of the tariff shocks and how high their estimate had gotten (I am not sure how they are calculating it, and it probably also changes day to day):

Order summary from an April 6 stepper motor driver chip order showing estimated tariff of 144%.

We just finally mostly recovered from the pandemic-era chip shortages, and we don’t want to wait too long on reacting as we did then, when some of our key stock was quickly bought up and left us unable to manufacture some products for nearly two years. So, over the past week, we have gone through and assessed the pricing of all of the thousands of products we sell. Since most products have various quantity price breaks and pricing for our distributors, we updated tens of thousands of prices.

Our system is not made for this. When we release products, it’s usually one at a time and we carefully assess our costs and competing products to set what we expect to be good prices. If there are small cost increases over time, we usually absorb them, and if there is a big jump in some component cost, we can reassess and reprice the affected products individually. But here, we are dealing with the sudden, not precisely-specified, and unequal cost change of almost every component. So, the price changes that we have made over the past week have been much less carefully considered and more dependent on formulas based on costs and countries of origin and other data we have available.

Many of the “individual assessments” amounted to looking at prices our programs spit out and seeing if they seemed reasonable, and in many cases we just flagged the item for further review later and accepted the proposed prices or overrode to stick with our old prices. And, in some cases, we had to override to make the prices higher still based on knowing that a particular part was already constrained or getting higher tariffs.

This morning (again, Saturday, April 12) as I started writing this post, I saw news reports that semiconductor devices would be exempted from the latest extra hikes. Even if that applies to the kinds of integrated circuits we use, I think that means the 70% portion that we have already been paying is still staying in place. It’s also not clear to me if things like inductors, which we’re currently paying an extra 45% on are going to stay at 45% or going to 170% or what (basically all commodity inductors in the world come from China as far as I know). Even if they do get some exemptions or the tariffs are walked back more broadly, I suspect the 45% increase will be a new minimum for a while.

These new exemptions announced today should be good news for us, but I find myself feeling deflated as I contemplate more and more effort having to go into constantly repricing everything while looking at bills for extra thousands of dollars in tariffs almost daily. (This post is mostly about the work going into pricing for our customers, but there is also lots of decision making about what to buy now, such as do we get extra material now before prices go up more, or do we hold out hoping for them to go down and risk running out of components? Will the demand still be there for a product if it’s more expensive? And so on.)

Anyway, the point of this post is not to whine or wallow or complain, but rather to give our customers and partners some idea of how we are dealing with the tariffs. Price increases are not pleasant, and we are working on keeping them to a minimum and reducing prices again when we can. We are also quickly developing a new price change notification feature on our website so that you can be notified of price changes on any products you care about:

New price change notification feature.

Because things are changing so quickly, we are rolling out this new website feature and I am announcing it before we have the notification email system implemented, so it might be a while before we can start sending out the notifications. I am thinking that until we have it all working and until things stabilize, this can also be a way for us to get feedback about which products might have been badly repriced and that we should prioritize for reassessment.

Please reach out and share your thoughts in the older established ways, too. Especially if you are a customer wondering about the future of some product, please let us know your concerns and we will do our best to give you whatever insight we might have and work with you on prices.