TARIFFS: How Tenacious is handling your preorders from China (JT Studio & Devil Toys)

I thought I'd take the email I just sent to our customers and post it here on the blog:

Hello Tenacious customers!

This email is perhaps coming a bit later than other shops, but I have been moving away from preorders coming directly from China for some time, so in some ways I got lucky in terms of the current chaotic tariff situation in the US.

I saw that our friends at Big Bad Toy Store sent a pretty thorough email about all this - their shop is heavy on preorders for goods originating from China so I think they really had to think everything through quickly, and explain it thoroughly.

But I will sum up the situation in case you haven’t read that email or you are unfamiliar (SORRY THIS IS A LONG EMAIL):

SUMMARY OF THE TARIFF SITUATION:

1. Our President has imposed tariffs on goods coming from China.

2. We pay those tariffs to the US Government (by “we” I mean the importer, the business receiving the goods, aka ME. Benny. Or BBTS. Or whichever toy shop you order from). China does not pay these tariffs. The manufacturers do not pay these tariffs.

3. The amount or % of the tariffs has been changing weekly or even daily at the President’s whim, so the actual amount that I will pay on the goods coming from China is questionable.

4. As of today, there is a 145% tariff on goods coming from China that I must pay once the goods arrive in the US. AGAIN, I myself have to pay this money to the US government. Valuation of goods is based on the commercial invoice attached to shipment.

5. Let’s say I pay for an action figure with a value of $100 per piece listed on the customs form. That means, in addition to paying $100 to the toy manufacturer, and the cost of shipping from China to the US, I ALSO have to pay an ADDITIONAL $145 tariff to the US government!

6. In the example above, the toy I would typically spend maybe $115 on (including shipping) now costs me $260 per unit. Let’s say for example, the retail price of this item is $150. I have now paid $260 to receive a $150 toy.

7. The tariff % has been changing fast and I don’t know what it will be in a week or a month. Nobody does. They could go away! They could go higher!

8. I could pass the costs on to you. I could say, Hi customers, remember that preorder you placed a deposit on? Yeah so the retail price is now double. Would you still like to pay for it?

9. Most of you will say “NO THANKS!” Which is understandable. 

HOW DOES THIS AFFECT CURRENT PREORDERS FROM TENACIOUS TOYS?

I had to send similar emails about the last batch of Sank / WEARTDOING which arrived right as the tariffs were set in place. I was forced to air ship those cartons to the US at the time to avoid the tariffs. This increased your cost of the Sank items, which was uncool. Some of you were happy to pay for the increase air ship cost but many of you weren’t, which is understandable.

So here we are in April.

I have 2 items which are ready which you have placed small $10 preorder deposits on:

1. The Devil Toys Machine56 REX White the second figure (Regular and Deluxe editions)

2. JT Studio’s Gaki Race Monkey (Regular figure, and Set with GoImp vehicle)

These are two highly anticipated releases which many of you have been placing preorders for.

They are both ready to ship now from the respective manufacturers.

So I have been trying to figure out how to handle this situation efficiently and as simply as possible.

Both manufacturers are aware of how many deposits we have taken in, and they have agreed to hold our units for a period of time. Not forever, but at least for now.

SO NOW WHAT?

What I want to do at this point is to just wait at least a few weeks. There is a chance that the US will abandon all tariffs at some point. If that is the case, we can all move ahead as normal: I invoice you, I pay the manufacturers, they ship to me, we are all good.

YOUR OPTIONS:

If you DO NOT want to wait, I would encourage you to explore ordering direct from Devil Toys or JT Studio, AS SOON AS POSSIBLE. If you receive your order before May 2, the “De Minimus” rule will still be in effect. I believe this rule exempts packages valued at under $800 from the tariffs. After May 2, ALL PACKAGES regardless of value will be subject to the tariff.

OPTION A- ORDER DIRECT: If you successfully order direct from the manufacturer, pls let me know and I will congratulate you and refund your $10 deposit and cancel your preorder. Devil Toys Shop • JT Studio Shop

OPTION B- CANCEL: If you don’t want any part of this and just want to move on, let me know and I will gladly refund your deposit and cancel your preorder.

OPTION C- WAIT WITH ME: If you want to wait it out with me, do nothing. I will wait it out and see how the tariffs look in May and potentially make some new decisions at that time.

I don’t really feel comfortable at this point invoicing any of you for a final balance, and then placing our order, only to get hit with a massive tariff bill later on. My margins on these items are normally 15 to 20% profit margin if I am lucky. I definitely cannot absorb a 145% tariff. 

I cannot assume that any of my own shipments will qualify for De Minimus at this time, so I cannot move forward super fast with my ordering and pray that we sneak through. The penalty for getting hit with a tariff of ANY size would be catastrophic for me. I wish I could take advantage of these 2 weeks before May 2, but I can’t. You might be able to.

SUMMARY:

This is a tough and complex situation. I have tried to think through the best way to move forward for my own unique American business. I am sure other toy shops may handle it differently. For me, I want to get through my current crop of preorders, and then shift my focus to lower ticket in-stock items that I source from US distributors / warehouses. 

Thank for understanding. While the odds are stacked against American small businesses right now, we are Tenacious for a reason! I will keep it going in some capacity, even if there’s a little bit of a pivot going on behind the scenes. Not really different than any other year: I pivot/adjust what I sell every year, and even every month. Onward!