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Tariffs force manufacturers to choose between tariffs or

higher

U.S. production costs

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Retailers resist pricing increases, squeezing small and

midsize

manufacturers

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Companies explore alternative manufacturing locations amid

tariffs

By Siddharth Cavale

NEW YORK, July 2 (Reuters) - When Plufl co-founders Yuki

Kinoshita and Noah Silverman pitched their "dog beds for humans"

prototype to Shark Tank in 2022, they envisioned making the

plush, snuggly, memory foam beds in China and selling them at

retail in the U.S. for $299.

Mark Cuban and Lori Greiner invested $200,000 jointly for

20% of the company, which went on to make over $1 million in

sales in 2023, selling beds on Amazon and their own website.

After U.S. President Donald Trump slapped a 145% tariff on

items imported from China in April, Kinoshita and Silverman

sprung into action, investigating if retailers would be

interested in selling a U.S. made version of their human dog

beds.

The retail price might go higher, but they thought a

"made-in-the-USA" label might be an attractive selling point and

help ease some U.S. retailers' concerns about the impact of

China tariffs.

Silverman and Kinoshita had previously toured a factory in

Las Vegas that could make the memory foam beds for $150 per unit

compared to the $100 overall cost to make the beds in China. But

that $150 manufacturing cost didn't include the faux fur lining

for the cover, which would still need to be imported from

China-adding another $100 per unit.

They pitched a sub-$500 made-in-the-USA version to Costco

, which it turned down, saying it couldn't stock the

product this year and might revisit the idea next year. Costco

did not respond to a request for comment.

The duo behind Plufl are among tens of thousands of American

small and midsize manufacturers facing the choice between paying

steep tariffs on Chinese imports or taking on significantly

higher domestic production costs. Even those willing to pay more

to make goods in the U.S. are confronting another reality:

retailers set prices for consumers and have been largely

unwilling to budge in the face of tariffs.

On June 11, when Trump announced a deal to lower tariffs on

Chinese goods to 55%, Kinoshita and Silverman decided to stay

the course manufacturing their human dog beds in China and

maintain the $299 retail price.

"We're absorbing costs in a number of ways, such as finding

shipping efficiencies by shrinking the box down more and also

taking some hit on our margin," Kinoshita said.

White House spokesperson Kush Desai said the Trump

administration remains committed to reviving U.S. manufacturing,

citing provisions in the Big, Beautiful Bill, which passed on

Tuesday with a slim majority in the Senate, such as allowing

businesses to fully expense equipment investments.

"These complementary policies will turbocharge growth and

drive investment throughout the supply chain," he said in an

emailed statement.

DRINKING MARGINS

Similarly, Aisha Chottani, another "Shark Tank" veteran,

found that tariffs threaten her ability to sell her products in

grocery stores.

Chottani, CEO-founder of Moment, makes her healthy,

stress-reducing carbonated beverages in Wisconsin, but her

packager, CanWorks imports pre-formed aluminum from China, and

is thus subject to aluminum tariffs which raised the price of

cans from by 20%.

When Chottani tried to pass on the 4 cents in additional

costs to Albertsons ( ACI ), which carries her $3.99 "Strawberry Rose"

beverage at about 30 locations in Texas and New Mexico, her

answer was swift. "Albertsons ( ACI ) refused any price increases," she

said and suggested she either keep the same price or leave.

Albertsons ( ACI ) did not respond to a request for comment.

In February, she launched Moment beverages in Sprout Farmers

Markets across the U.S., but was forced to do so with

higher-priced cans. "There wasn't enough time to shift

production to factories in Vietnam or other places," she said.

For now, Chottani is keeping her wholesale price the same

even as her costs have gone up. She's raising additional cash

from investors and looking to cut costs. "Even in the short term

a 20% price hike is huge and is going to wipe out all your

cash," she said.

BABY TARIFFS

It's not just startups that are struggling. Bugaboo, the

Netherlands-based maker of expensive baby gear, owns its own

factory in China and would seem to be well-prepared to weather

tariffs.

The company's popular "Fox 5" stroller, which retails for

about $1,500 in the U.S., is made at its factory in Xiamen,

China, where 97% of strollers and car seats imported to the U.S.

are made, according to ImportGenius, which tracks U.S. import,

export records and shipping manifests.

But when Trump's tariffs hit, Bugaboo started to reevaluate

that strategy. The company had begun studying moving production

to other countries in Asia to have more regional production

flexibility as well as the U.S., but any move would be years

away.

It took Bugaboo a number of years to establish its Xiamen

operations. If it had to build a similar setup in the United

States, it would take the same time. "Even if we start now, it

would take several years to set up operations," said Chief

Commercial Officer for North America, Jeanelle Teves.

The U.S. currently lacks a specialized manufacturing

footprint for baby strollers that requires advanced tooling,

high-grade materials, and a skilled labor force. "It's not just

about assembling parts; it's about engineering performance and

safety," she said.

In the meantime, Bugaboo decided to pass some of those costs

onto customers, raising prices $50 to $300 on several products

including high chairs, play pens, and a new version the Fox 5

stroller on May 20.

"The increases do not fully offset the tariff, and Bugaboo

is continuing to absorb part of the cost in order to minimize

the impact on American families and retailers," Teves said.

TAKING NOTES

Pensacola, Florida-based Simplified, maker of high-end

notebooks, cards and stationery, can make a day planner complete

with a hard cover, gold corners, foil and color printing for

about $12 in Shenzhen, China, where many U.S.-bound paper

products are made.

After the tariffs hit and small businesses began feeling the

pain, CEO-founder Emily Ley said many people asked why she

didn't just move her manufacturing to the U.S.

"The United States simply does not have the infrastructure,"

said Ley. The problem? Producing the same planner in the U.S.

would cost $38 - and that's with lower-quality materials.

Ley said she keeps her manufacturing costs at 25% of the $64

retail price of the planners. She said she can't pass on the

cost of tariffs, because then her planners would cost $100.

"People aren't gonna pay $100 for a paper planner, nor should

they," said Ley, who has filed a lawsuit against Trump alleging

that his use of emergency powers to enact tariffs was illegal.

In the meantime, Ley is absorbing the cost and continuing

manufacturing in China, which means cutting back on other areas

like investing in growth, jobs, salaries and advertising.

"You know, we're all encouraged to pursue the American dream

and create businesses," Ley said. "The tariffs at any level are

truly punitive. It seems kind of counterproductive to the whole

point of this whole thing."