JDS Industries is a 100% employee-owned company specializing in blanks and supplies for laser engraving and printing.

A Letter From Scott Sletten About Tariff Impacts

May 1, 2025

As everyone is aware, there is a lot happening in the world of imported products and tariffs. It is a fast changing world right now and constantly in the news it seems. We get a lot of requests for information from our customers on what to expect going forward, and honestly nobody knows for sure, but we are doing all we can to prepare for the possibilities. I am writing this letter to let our customers know where I see things at right now, and a little about what I am expecting could happen. I spend around 3 hours a day researching and monitoring news from around the world to be better informed which will hopefully allow us to make better decisions on what to do. I was also in Vietnam all of last week to talk with a few vendors to get their take on what is happening from their perspective. Keep in mind this information is based only on what I know today and is all subject to change tomorrow. Higher tariffs are going to have a very big impact on many things sold in our industry, and the uncertainty of what lies ahead is going to have just as big of impact as the tariffs. Let’s start with what has happened so far and what we know.

The 20% tariffs on products from China started in February and we have been paying the 20% extra on all shipments from China starting in early March. There is also an additional 25% on some aluminum and steel items which I covered in my last letter. Our price increases based on these tariffs are now in effect and we saw a lot of customers stocking up before those changes went into effect. I expect these tariffs to stay in place and it is very likely they will increase as the year goes on.

Reciprocal tariffs were announced on April 2nd and these apply to nearly all countries in the world and ranged from 10-49% additional tariffs. Shortly after these tariffs were announced, a 90 day pause was put in place and the tariff amount was reduced to 10% for most countries other than China. As a result of this, we will be paying the additional 10% on containers arriving starting in early May on countries we import from such as Vietnam, Malaysia, Thailand, Taiwan and a few others. Assuming these stay in place, there will be a 10% price increase on items from these countries in about 60 days. The 90 day pause ends in July and at that time some rates could stay at 10% and some could go much higher again depending on negotiations between our governments. I do not expect any country to go back down under the 10% level from what I am reading.

Do not assume anything you buy from a domestic supplier will stay the same price this year. We are getting price increase announcements every week from domestic suppliers as well. In many cases there is a foreign component to a product or something needed to manufacture a product comes from overseas and has gone up in price. Many chemicals needed to make adhesives, paints and coatings on products come from overseas so are impacted. Most domestic price increases will be smaller though depending on the foreign content of a product.

Now it is time to talk about the 800 pound gorilla and that is the tariffs on products from China. Right now there is a 145% minimum tariff in place on any products brought into the US from China. Many companies including JDS have stopped all new orders and are not allowing anything to be booked or shipped from China right now. We feel that there is a good chance the 145% rate will come down and we really do not want to have to more than double our prices to allow for this tariff rate. Stopping of all shipments is only a temporary solution though that can not continue very long. Let me give you three examples. A company that keeps 6 months of inventory in stock has some time to wait this out and hope that the rate goes down Probably two-three months before they start to run out of some of these products. A company that keeps 60 days of inventory has already been on hold for one month now, so very soon they have to decide to either allow themselves to run out of product or more than double their prices if they ship at 145%. If you are a manufacturer and rely on just in time inventory from China, you are in freak out mode already and wondering how much business you are going to lose if you double your prices, but the alternative is to shut down your manufacturing due to missing parts.

From what I am reading, the US and China are having some initial discussions right now and the pressure from the business world is increasing daily both in the US and China. This is affecting nearly everyone and businesses large and small. A long term solution and agreement will take quite a while to work out. It is my hope that they can both agree to reduce the rates so that products can flow while a larger agreement is being worked out. I do not see a lower rate going back down to the 20%, I think 30-50% is more likely which would allow companies like us to start importing these products again even though we know this will mean more price increases this fall. If nothing happens and the 145% tariffs stay in effect, we will have to then make a decision on what products we think will continue to sell at a price that will double. It is likely that some products will be simply discontinued in this scenario.

It is reported that the volume of containers leaving China have dropped over 60% in the past few weeks already. With the large decrease in shipping from China, this means there is very little inventory on the way right now to replace what companies are selling. This is going to lead to product outages depending on the inventory levels of each company and product. The longer this continues, the worse it will get. It will likely cause panic buying and hoarding as people stock up on things they know they are going to need. The longer this goes on the more product is building up at factories in China that needs to be shipped as well. If an agreement happens in the next two weeks for example, I think it will take 2-3 months to find room on ships to get all of this backlog of product shipped. If there is not an agreement for 2 months or more, the backlog will likely take 6 months or more to ship which will mean wide spread product outages like we saw during COVID. This backlog and surge in shipping is also likely to cause container rates to increase dramatically as all companies want their products shipped as soon as possible and then it is just a supply vs demand imbalance which will cause prices to increase.

JDS sources many products from countries other than China. These items will see smaller price increases and less product outages. We are not stopping any shipping in these other countries at this time. We are actively exploring items that can be made in countries other than China, or in some cases made in the US. This process takes time and investment though and for most companies they are simply on hold in making these kinds of decisions due to the future uncertainty.

The purpose of this letter is not to scare you about what could happen, but more to inform you on what I am hearing, seeing and expecting as possible scenarios. I am hopeful that this letter will help you answer questions your customers have and allow you to make the best decisions for your company as well. And keep in mind this can all change tomorrow.

Best Regards,

Scott Sletten CEO JDS Industries