Bunnie Weighs In On Tariffs

June 20, 2018 by Adam Fabio 150 Comments

[Bunnie] has penned his thoughts on the new 25% tariffs coming to many goods shipped from China to the US. Living and working both in the US and China, [Bunnie] has a unique view of manufacturing and trade between the two countries. The creator of Novena and Chumby, he’s also written the definitive guide on Shenzen electronics.

All the marked items are included in the new tariffs

The new US tariffs come into effect on July 6th. We covered the issue last week, but Bunnie has gone in-depth and really illustrates how these taxes will have a terrible impact on the maker community. Components like LEDs, resistors, capacitors, and PCBs will be taxed at the new higher rate. On the flip side, Tariffs on many finished consumer goods such as cell phone will remain unchanged.

As [Bunnie] illustrates, this hurts small companies buying components. Startups buying subassemblies from China will be hit as well. Educators buying parts kits for their classes also face the tax hike. Who won’t be impacted? Companies building finished goods. If the last screw of your device is installed in China, there is no tax. If it is installed in the USA, then you’ll pay 25% more on your Bill of Materials (BOM). This incentivizes moving assembly offshore.

What will be the end result of all these changes? [Bunnie] takes a note from Brazil’s history with a look at a PC ISA network card. With DIP chips and all through-hole discrete components, it looks like a typical 80’s design. As it turns out the card was made in 1992. Brazil had similar protectionist tariffs on high-tech goods back in the 1980’s. As a result, they lagged behind the rest of the world in technology. [Bunnie] hopes these new tariffs don’t cause the same thing to happen to America.

[Thanks to [Robert] and [Christian] for sending this in]

Making Electronics Just Got 25% More Expensive In The US

June 15, 2018 by Brian Benchoff 312 Comments

As reported by the BBC, the United States is set to impose a 25% tariff on over 800 categories of Chinese goods. The tariffs are due to come into effect in three weeks, on July 6th. Thousands of different products are covered under this new tariff, and by every account, electronic designers will be hit hard. Your BOM cost just increased by 25%.

The reason for this tariff is laid out in a report (PDF) from the Office of the United States Trade Representative. In short, this tariff is retaliation for the Chinese government subsidizing businesses to steal market share and as punishment for stealing IP. As for what products will now receive the 25% tariff, a partial list is available here (PDF). The most interesting product, by far, is nuclear reactors. This is a very specific list; one line item is, ‘multiphase AC motors, with an output exceeding 746 Watts but not exceeding 750 Watts’.

Of importance to Hackaday readers is the list of electronic components covered by the new tariff. Tantalum capacitors are covered, as are ceramic caps. Metal oxide resistors are covered. LEDs, integrated circuits including processors, controllers, and memories, and printed circuit assemblies are covered under this tariff. In short, nearly every bit that goes into anything electronic is covered.

This will hurt all electronics manufacturers in the United States. For a quick example, I’m working on a project using half a million LEDs. I bought these LEDs (120 reels) two months ago for a few thousand dollars. This was a fantastic buy; half a million of the cheapest LEDs I could find on Mouser would cost seventeen thousand dollars. Sourcing from China saved thousands, and if I were to do this again, I may be hit with a 25% tariff. Of course; the price on the parts from Mouser will also go up — Kingbright LEDs are also made in China. Right now, I have $3000 worth of ESP-12e modules sitting on my desk. If I bought these three weeks from now, these reels of WiFi modules would cost $3750.

There are stories of a few low-volume manufacturers based in the United States getting around customs and import duties. One of these stories involves the inexplicable use of the boxes Beats headphones come in. But (proper) electronics manufacturing isn’t usually done by simply throwing money at random people in China or committing customs fraud. These tariffs will hit US-based electronics manufacturers hard, and the margins on electronics may not be high enough to absorb a 25% increase in the cost of materials.

Electronics made in America just got 25% more expensive to produce.

Taking A U2F Hardware Key From Design To Production

September 29, 2016 by Bryan Cockfield 17 Comments

Building a circuit from prototyping to printed circuit board assembly is within the reach of pretty much anyone with the will to get the job done. If that turns out to be something that everyone else wants, though, the job gets suddenly much more complex. This is what happened to [Conor], who started with an idea to create two-factor authentication tokens and ended up manufacturing an selling them on Amazon. He documented his trials and tribulations along the way, it’s both an interesting and perhaps cautionary tale.

[Conor]’s tokens themselves are interesting in their simplicity: they use an Atmel ATECC508A specifically designed for P-256 signatures and keys, a the cheapest USB-enabled microcontroller he could find: a Silicon Labs EFM8UB1. His original idea was to solder all of the tokens over the course of one night, which is of course overly optimistic. Instead, he had the tokens fabricated and assembled before being shipped to him for programming.

Normally the programming step would be straightforward, but using identical pieces of software for every token would compromise their security. He wrote a script based on the Atmel chip and creates a unique attestation certificate for each one. He was able to cut a significant amount of time off of the programming step by using the computed values with a programming jig he built to flash three units concurrently. This follows the same testing and programming path that [Bob Baddeley] advocated for in his Tools of the Trade series.

From there [Conor] just needed to get set up with Amazon. This was a process worthy of its own novel, with Amazon requiring an interesting amount of paperwork from [Conor] before he was able to proceed. Then there was an issue of an import tariff, but all-in-all everything seems to have gone pretty smoothly.

Creating a product from scratch like this can be an involved process. In this case it sounds like [Conor] extracted value from having gone through the entire process himself. But he also talks about a best-case-scenario margin of about 43%. That’s a tough bottom line but a good lesson anyone looking at building low-cost electronics.