Razor USA's once-straightforward import setup for its made-in-China scooters has been upended by Trump-era tariffs, forcing the company to overhaul who pays U.S. customs duties and how the costs are shared across the supply chain.
The designer of personal ride-on vehicles once paid all import duties on its products, which were entirely manufactured in China, according to Bryan Wood, VP of global supply chain. Today, that arrangement has been upended: U.S. customs duties are now folded into the factory price, which also includes production costs, overhead and the supplier’s margin.
The tariff portion of the price ultimately impacts costs for the supplier factories, Razor, retail partners and, ultimately, the consumer, Wood told Supply Chain Dive. The company’s main retail partners are Amazon, Target and Walmart.
"We can't move the retail price that quickly, so it is not one of those things where we can just pass that on to the consumer," Wood said. "So, we eat it, Walmart eats it, the factory eats it, and we try to smooth that out as much as possible."
Razor’s manufacturing suppliers pay the import duty because the levy is calculated on the value of the product as it leaves the factory floor, which is lower than the price Razor pays for the goods, Wood said.
"It's better to apply it to the factory cost," he said.
Razor, a privately held company based in Cerritos, California, has also cut back manufacturing in China. Eighteen months ago, all Razor products were made there. Today, that share is about 75%, with the rest produced in Thailand and Vietnam, Wood said. The company selected those countries to maintain quality control since its China-based manufacturers are willing to operate factories there.
Meanwhile, moving to Mexico or the U.S. wouldn't be an option because that would extend Razor's supply chain, which would cost more money without any benefit, Davis said.
Wood is comfortable with Razor’s tariff strategy today, but since President Donald Trump began imposing global tariffs last year, he has learned that nothing is certain.
"Trying to predict what Trump's going to do is impossible, and every time we've tried to do it, we're wrong," Wood said. "So, we just have to triage it as things change."
Wood’s experience with tariffs has also underscored the need for flexibility, he said. After 25 years of running the same supply chain, Razor was unprepared when Trump imposed tariffs as high as 145% on goods made in China, before those levies were reduced through negotiations.
"Flexibility is what you're looking for," Wood said. "As much flexibility as you can get."
Razor applied for tariff refunds after the Supreme Court ruled in February that many of Trump’s tariffs were illegal. The company has recovered 10% to 15% of the total amount covered by the ruling so far and expects to receive more, Wood said.
"I was expecting a lot of documentation, a lot of pushback from Customs, and it's been very, very straightforward," Wood said, adding, "the software they put up has been shockingly good."
