We operate a small business in Cleveland, Tn., with 20 employees working at our headquarters and another eight team members spread across the United States. We create, market, sell, and service our own model train brands. We utilize a factory in China to design, tool, and manufacture our products.
The 145% tariff instituted this week will be devastating to our business, our people, and the Hobby Industry. Without the tariff being lowered significantly or removed altogether soon, our company and many others in our industry will go out of business within weeks, and thousands of American workers will be unemployed.
The tariff is paid by the importer, not China or the Chinese factory.
We must pay the 145% tariff before goods are released from the port of entry. We project the tariff to cost our company millions of dollars this year and be several times greater than our net profit. There’s no way we can absorb this expense, so we’ll have to have a substantial price increase.
Your first reaction may be, “Build the trains in the United States, and there will be no tariff.” Here’s why this is not possible.
1. There is no factory in the United States currently building high-quality, super-detailed, fine-scale model train locomotives and freight cars.
2. There is no supply chain in the United States for motors, electronics, wire form parts, wheels, metal parts, etc.
Your next thought may be, “Start your own factory in the United States”.
1. We do not have millions of dollars available to us to open a factory.
2. Opening a factory would take a few years before production could begin.
3. The selling price would increase 3x to 4x. American consumers would be unwilling to pay that much.
In our business model, we announce a model with pricing, accept preorders without payment, and then bill the customer when the product arrives 9 to 12 months later. When a container lands at our warehouse, it is normally 90%+ pre-committed.
A locomotive we announced in August 2024 for delivery this spring will likely need to increase from $315 to $490 ($175) just to cover the cost of the tariff. If we raise the price by this amount, we will receive a significant number of preorder cancellations. Our ability to pay our employees and bills will be seriously impacted.
As a small business, we have limited capital to weather this storm for several weeks or months. We’ve built an incredible team of talented people who are counting on us to provide a paycheck so they can support their families.
We have emailed and called the White House, senators, and our congressman. No one seems to care about the impact of large tariffs on small businesses like ours with American workers. Our company and our entire industry need relief from these tariffs immediately. We’re just asking for fair trade. Your help in garnering attention on this matter would be greatly appreciated.
Thank you for taking the time to read this letter.
Shane Wilson