Small Business Owner Tests American Manufacturing Preferences
Ramon van Meer, a small business owner, frequently heard claims of willingness to pay more for American-made products. When President Donald Trump raised tariffs on Chinese imports by an additional 145%, van Meer conducted an experiment to test these claims.
“I wanted to know the answer and then use it for my own company,” van Meer, the founder of Afina, told Business Insider.
Product Reallocation and Pricing Experiment
Van Meer decided to source US suppliers for his top-selling product, a unique filtered shower head. His filters are made in the US, with additional materials from Vietnam, and the final product is assembled in China using a single supplier.
Transferring the entire production process to the US required finding four to six different suppliers. The cost of production using US suppliers was revealed to be three times more than paying the China tariff.
With this pricing information, van Meer presented two identical products on Afina’s website with a single difference: their origin and price. Customers could choose between a Chinese-made item for $129 or a US-made version for $239.
“I’m big on just testing it out with real data and real purchases,” van Meer explained.
Consumer Response to American vs Chinese Products
After several days and over 25,000 website visitors, van Meer sold 584 Chinese-made shower heads. Interestingly, not a single US-made shower head was purchased.
In a blog post that went viral, van Meer called the results “sobering.”
“We wanted to believe customers would back American labor with their dollars. But when faced with a real decision — not a survey or a comment section — they didn’t,” he wrote.
Future Plans for Afina’s Production
Now, van Meer is focusing on shifting production out of China to a country with a lower tariff rate. “Staying in China is not sustainable because even if they make a deal, we don’t know what’s going to happen,” he said. “The United States is also not an option, because there’s just no facilities that can make it.”
He is yet to decide whether to incorporate the tariff cost into the product price or apply a surcharge as other businesses have done. “We’ll probably do testing,” he said, indicating a continuation of his data-based decision-making approach.
Read More US Economic News