Navigating the Tariff Situation

This post probably won't be interesting to everyone, but I thought to post about the tariff situation, as it's a rather significant impact many might be wondering about.

The Situation

For those who are unaware, there is currently a roughly 150% tariff on most goods made in China, where we produce our puzzles. This means that when the goods cross into the US, we're responsible to pay a 150% tax on the cost of goods, which is a massive amount for any company to absorb. For most, it's a pretty untenable situation.

Fortunately, Puzzle Bomb doesn't carry any debt, as we don't spend money we don't have, so any short-term profitability issues don't tank us.

Our Short-Term Plan (and maybe long-term?)

Planning how to respond to this situation is very difficult, as the news changes every other day, making it hard for businesses to form long-term plans. So, here's the immediate response we need to take to stay afloat:

For future puzzles, we're going to have to add a tariff fee along with shipping, and we will charge exactly what it costs per puzzle to get them into the US. We're not trying to maintain our profit margin, but rather just cover the added tax costs that we just plain can't absorb. This amounts to about $10 per puzzle at the current tariff.

We like this approach, as in general, once prices rise, they tend to not come back down. This way, our sell price remains the same, just with a fluctuating fee that makes it clear that the fee is related to ever-changing geopolitical activity, rather than us simply deciding to raise prices.

Our Other Short-Term Plan

Over the last couple of years, I held back 100-200 of each puzzle to sell at in-person shows. In-person sales were less than what they needed to be to make it worth our while, so we're sitting on some inventory.

So, once the current Kickstarter for the Spring 2025 collection fulfills soon, we're launching another campaign where we're opening the Bumfuzzled vault, all 19 Bumfuzzleds to date available in these limited quantities! This will allow us to raise capital to weather the current, hopefully shortish-term, storm.

This is all inventory we received pre-tariffs, so we won't need to charge any extra fees on them.

Long-Term Possibility

One common thing I hear is "Why don't you just move production to the US?". The main issue with this is that the US simply doesn't have the production capacity or necessary efficiency to produce in meaningful quantity or quality, while also maintaining a price people would be willing to pay.

In China, entire cities/regions were built around certain types of manufacturing. For example, where our puzzles are made, the entire region specializes in printed and laser cut wooden goods/trinkets. This means the pulp factory, wood processing, printing, laser cutting, and box printing/assembly are all within spitting distance of each other, sometimes under the same roof. When I work with my manufacturer, they organize that entire process end-to-end, from sourcing materials to final packaging.

If I move operations to the US, I need to work with at least 4 different suppliers, shipping things around for all the steps:

1) Wood - I first need to source the proper plywood, MDF, or HDF. This is rather specialized for laser cutting, and likely requires me to place a large quantity of wood, requiring a large up front investment. While stocking up on years worth of wood isn't out of the question, it's both a large investment, and requires additional storage fees.

2) UV Printing - This has been the easiest to find a solution for, as the US has many sign-printing shops that can do this type of printing. I have reasonable quotes for this step.

3) Laser Cutting - This has been remarkably difficult to find someone that can do this at the scale we operate at, and at a price that can make sense. Laser cutting is also time consuming, and in the US, time is money. The labor in China is much cheaper, not because workers are mistreated, but because cost of living there is far cheaper. While the other steps are still a challenge, this is a big one.

4) Box/Packaging - This is another huge challenge, as the US has very little production for custom-printed paper goods. US manufacturing in this area is very antiquated compared to countries like China who specialize in this. If we switched to US-based manufacturing, I'd have to ditch the boxes, and find another solution, like attaching a sheet of acrylic/plexiglass to the puzzle fronts.


Putting it All Together

Keep in mind, we'd also ideally find all four of these stages within some close proximity to each other to avoid heavy freight fees between stages.

As I locate vendors and price these things out, I find our production cost would increase by over 100%, which leaves us with the same pricing problem. The only reason to go this route is to provide a hedge against current and future geopolitical changes. Given the seeming lack of long-term plan or transparency at the governmental level, we could go through all the work of making these changes, all to find out it was all unnecessary a week from now.

So, it would be a drastic step to take at this juncture, which I don't think is wise until we see more of how things shake out. Given the amount of time and effort invested to get our manufacturing process down, which is no small feat for our style of puzzle, it's hard to make this route make sense at the moment.

This is also just for Bumfuzzleds, which are incredibly easier to produce than the Party in the Back series. I don't think Party in the Back is even a marketable product when made in the US. They do well at the current price point, but they would become a super niche product if I had to sell them for $250 or so; it just wouldn't be worthwhile.

Conclusion

While the situation is ever changing and unstable, we're not worried, and have tremendous peace about everything. Our lives and our joy aren't derived from our financial situation, business prospects, etc, so while this is all a challenge, we have an incredible peace in Jesus as we navigate.

We appreciate all of your support since we launched this little puzzle company about 5 years ago, and look forward to serving up our wonderful creations for you for years to come!