How Brooklyn Taiwanese Shop Yun Hai Is Impacted by Trump’s Tariffs | Eater NY

"A Brooklyn Taiwanese pantry and home goods shop founded by Lisa Cheng Smith and co-owned by Lillian Lin is being upended by a newly announced 32 percent tariff on Taiwanese goods that underpins the store’s entire business; Taiwanese officials called the tariffs “unreasonable” and said that they would “seek clarification and continue talks with Washington,” Reuters reports. Cheng Smith stresses that their operation is more than retail — “We order from farmers, artisans, breweries, etc., in Taiwan, then consolidate those goods in our own warehouse over there,” Cheng Smith says — and that they also serve as a form of cultural diplomacy (the president of Taiwan literally stopped by). They began as an online retailer before opening an East Williamsburg storefront in 2022 beside a neighboring Taiwanese business, with whom they have collaborated, and they sell premium soy sauces and vinegars as well as a private label (dried green mango, wax apple) that helped them stand out in a sea of homogeneous "shoppy shops." The tariff shock has immediate cash-flow implications: “We thought we might get hit with some small percentage, but Taiwan hasn’t really been a focus in the tariff conversation, so the 32 percent we were hit with floored us. We did have a big shipment arrive just before they went into effect, so we’re ok… for the next two months only.” Cheng Smith describes a rapid, around-the-clock effort with her partner to “figure out how to react and minimize damage. Our priority is to stay in business. The enactment of these tariffs feels like we are just being shown the door, so to speak, but we’re not ready to give up.” They have had to “add 40 percent to our landed cost estimates” and expect domestic costs to rise too — “it may cost us 10 percent more to ship products to our customers’ doorsteps because of an increase in the cost of materials locally.” Cheng Smith lays out the narrow economics and the hard choices: “Unfortunately, prices can only be hiked so high before people are simply priced out, so we need to figure out how to reduce costs or diversify our revenue stream. For many places, this may be eliminating jobs. For us, I’m looking directly at how we fulfill, the platforms we use, all the fees we pay, and all the other ways we have to create revenue and value. Everyone is taking a cut of our profit, from affiliate marketers to payment processors to web platforms. And now, U.S. Customs. It really leaves very little for us in the end to be flexible with.” She gives a concrete example of the impact: “Assuming all cost increases are passed on, it would look like this: If we buy something for $10 from a farmer in Taiwan, we’ll need to pay $3.20 to the US for it to enter the US, or about 32 percent. So that item becomes $13.20. To sell this at retail, we might mark it up 60% (because our products are expensive to begin with, we keep our markup lower than typical), so the $10 product would sell for $16. With tariffs, the end customer price would be: $21.12, representing the 32 percent increase. If we didn’t pass any costs on, it would look like this: Before tariffs: Buy goods for $10, sell them at $16. Gross profit margin was about 37.5 percent. It costs us another 25 to 30 percent to just store, warehouse, and deliver the product, so we’re left with maybe 7.5 percent to pay our staff and run operations. After tariffs: Buy goods at $13.20 and sell for $16. Gross profit margin becomes 17.5 percent. After warehousing and last-mile fulfillment costs, we’d now be running at a 12.5 percent loss.” The bottom line: to survive as importer, retailer, and brand they will “need to drastically change how we operate, what we stock, and how we deliver it,” and do so almost overnight while continuing to run the business they already have." - Erika Adams