In business, there are supply chains and while most consumers will go to a retail store, those retail stores receive supplies from somewhere. In the world, there have been and are countries where the supplies can be received for less than it costs to do it locally. Every country has its advantages and disadvantages, however it is the one that you live in and make a living which is the best one. The difference between cost of acquisition and cost of selling is profit or margins. All businesses want the highest margins at a stable environment or for a number of years the situation remains the same. Every since the 1990’s, the cost of manufacturing and the ability to send the items to the US has been lower in the US. (If you ever watch a show similar to Shark’s Den – one of the sharks will say I have connections to China, we can lower your costs and increase the margins, if you choose me to invest in your company). When the entrepreneur says yes, he or she is buying into the supply system.

In an article by Alexandra Stevenson and Paul Mozur of the New York Times News Service, one of the inventions which is changing business is drones. In the world of inexpensive drones, the company US Skydio was the big hope. The defense industry and police agencies preferred a US manufacturer and Skydio was their first choice.

Skydio receives its supplies from various parts of the US and China. When President elect Trump said he would impose tariffs on China, China imposed sanctions on the US and severed the companies access to essential battery supplies. The move stops deliveries for Skydio’s customers including the US military.

The message from China, hit us with tariffs, we will hit you too.

The last time President Trump was in power, Beijing was fairly careful to meet the tariffs that the US put in place, said Jude Blanchette, a China scholar at the Center for Strategic and International Studies in Washington, DC. This time around, China will flex its muscles

China has been working on an unreliable entity list to penalize companies that undermine national interests. China will take steps that potentially choke global access to critical materials.

For many companies that rely on China than China does on them, Beijing has the ability to exact major pain. for example: Skydio has spent years building a supply chain outside China, but remained reliant on one crucial item: batteries.

Linking to dividend paying stocks, every company has supply chains and managing supply chains or logistics is important to maintain margins for the company to make profits. Likely your investments have many suppliers and that is a good thing until the President says it is not so good. Will they change and why would they change is the issue? How does your company protect its margins?

There are more questions than answers, till the next time – to raising questions.