Sent Items #186: Monday, April 28, 2025

Happy Canada Election Day (I’m Canadian too, and voted!)

According to Polymarket it appears that Mark Carney will remain Prime Minister, a role he’s had for the last several weeks since Trudeau stepped down.

I trust most do not follow Canadian politics, but what has happened in the last 6 weeks is truly remarkable. Just check out this chart below:

With “de minimis" from China ending later this week, I was curious to see what today’s cost of a product I purchased on Temu back in January of this year would be. I was shocked - but unsurprised - to see the cost for those beautiful, trendy, plastic smelling made in China slippers I purchased for a total of $13.07 are now $35.14!!!

Actual slipper cost went from $11.96 to $14.39 (an increase of 20%), plus $19.34 in import charges. A total increase of almost 200%!

Once a way to purchase cheap crap for cheap, it appears their competitive advantage has dwindled and I can't imagine any material volume will sustain until they determine a new loophole...

Wouldn’t be a Sent Items if I didn’t include a tweet from Ryan Petersen.

The U.S. imports $600B worth of goods from China every year, 95% of that via ocean freight. Those goods sell at retail for ~$2 TRILLION. If things don’t change, this will lead to a failure of tens of thousands of American businesses, and the laying off of millions of employees. We will also have mass shortages this summer as the goods don’t show up (remember stocking toilet paper and other household goods).

The first ships carrying goods paying the duties arrived last week. And the decline in freight arrivals will hit in the coming weeks. Companies stocked up on inventory in anticipation of April 2nd, so it will take a while before shortages hit.

If Trump reverses course very soon, he can head off the worst of this catastrophe. But everyday it gets worst. Soon we may find ourselves in a bullwhip scenario where Trump relaxes the tariffs, all those cancelled orders get rebooked creating a huge surge. And with all the cancelled services and repositioned vessels, there won’t be enough throughput in the ocean network to keep up. Remember when container rates from China to the U.S. hit $20,000+ at the height of COVID?

Two fascinating charts from my friends at William Blair Equity Research:

This first one visualizes how starting in 2019 with the original China tariffs, most companies have made notable progress moving production out of China. Roughly 20% of textile and apparel imports to the U.S. still come from China, down from a third in the decade leading into 2020.

This second one shows how China contributes 72% of sporting goods and toys imports (down from 81% in 2018), 44% of household appliances imports (down from 54% in 2018), 29% of furniture imports (down from 57% in 2018), and only 9% of auto parts imports (down from 13% in 2018).

I suppose it also wouldn’t be a Sent Items if I didn’t include another great video by Aaron Rubin from Shiphero where he provides an unconventional take on how margins will go up and e-commerce brands will make more money due to the tariffs. Check it out:

Finally, my friends at Dollar Fulfillment are looking for their next CEO (link). I can tell you that this would be an extraordinary role and team to lead. If you are qualified and interested in this role - and I can attest to it! - I would be happy to connect you with their ownership team.

Have a great week!

- Matt

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