By Siddharth Cavale
NEW YORK (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, which carries her $3.99 “Strawberry Rose” beverage at about 30 locations in Texas and New Mexico, her answer was swift. “Albertsons refused any price increases,” she said and suggested she either keep the same price or leave.
Albertsons 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.”
(Reporting by Siddharth Cavale in New York; Editing by Lisa Jucca and Michael Learmonth)
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