In April 2025, Our Place was looking at a 170% tariff on appliances imported from China. At that rate, the landed cost of a Wonder Oven or Dream Cooker exceeded what the product could realistically sell for at retail margin. The existing supply chain, sourcing appliances from China and shipping directly to US customers, was no longer viable. Production had to move.
This playbook applies any time significant tariffs hit a product category, not just the 2025 appliance situation. The mechanics are the same whether the rate is 25%, 50%, or 170%. The question is always the same: can the supply chain be redesigned fast enough, at an acceptable quality level, to survive the tariff impact?
The country-of-origin engineering approach
Tariffs apply based on the country of origin, not the country of purchase or the nationality of the brand. Country of origin is determined by where substantial transformation occurred, or where sufficient value-add processing happened to confer origin. The threshold in most trade frameworks is around 20% or more value-added in the new country.
The approach Our Place pursued: ship components from China to Thailand, perform final assembly in Thailand with more than 20% value-add manufacturing, and export the finished product as Thai-origin. Thai-origin appliances face standard tariff rates, not China-specific rates. The effective tariff drops from 170% to something in the single digits.
Thailand was the primary destination in 2024 and 2025 for this kind of pivot. Vietnam was the other common option. Both countries had established manufacturing infrastructure from earlier supply chain shifts, which meant factory capacity existed even as demand for it surged during the tariff wave. This cut both ways: capacity existed, but so did competition for that capacity from every other brand doing the same calculation.
The real constraints
Three things are consistently underestimated by brands doing this for the first time.
The first is timeline. Moving production to a new country is not a three-week project. Finding a qualified factory, negotiating terms, completing a quality audit, running a sample production run, and scaling to volume takes a minimum of three months and more realistically four to six. Our Place needed 110,000 units from the Thailand facility within three months of the tariff announcement. That is an aggressive target that required a factory that already had capacity and a team that could manage the setup in parallel with ongoing US operations.
The second is quality control reset. Quality control relationships are built over time. When you move production to a new factory, everything resets to zero. The supplier does not know your tolerances yet. You do not know their failure modes yet. The first production runs from a new factory carry a higher defect rate than established production runs, almost without exception. Budget for it. Plan an inspection process before the first container ships.
The third is that not every product can be pivoted. Some products require specialized tooling, specific certifications, or manufacturing processes that do not exist in Thailand or Vietnam at the quality level you need. The decision to pivot has to be based on what the factory can actually produce, not on what the tariff math says you need to happen.
When it makes sense
The tariff arbitrage play makes sense when the tariff is punitive enough to make the current source country non-viable, when the product can be substantially manufactured in a third country at acceptable quality, when the business has the cash to fund a transition period where old inventory depletes and new inventory ramps up, and when the timeline to first production in the new location fits within the window before existing inventory runs out.
For Our Place, appliance inventory was projected to run out by late August 2025. The Thailand production timeline was tight but feasible. The decision to pivot was not a long strategic debate. It was the only option that kept the product line alive.
When it does not make sense
It does not make sense when the tariff is temporary or likely to be negotiated down. Supply chain pivots take time and money, and reversing a production move is just as disruptive as making one. If there is credible reason to believe the tariff situation resolves within six months, holding existing inventory and waiting costs less than a manufacturing relocation.
It does not make sense when the product genuinely cannot be moved. Some categories, highly specialized electronics, certain food products, items with China-specific regulatory certifications, cannot be relocated without losing compliance or quality. The tariff math does not override this reality.
It also does not make sense as the only response to the tariff. While the supply chain pivot plays out, the faster mitigation is marketplace diversification. If you are US-centric on Amazon and tariffs hit your primary product category, launching in UK, EU, or Australia reduces USD tariff exposure while the new factory ramps up. Two responses in parallel is better than waiting for one to complete.
