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US China Trade War: Impact on Scuba industry

Discussion in 'General Scuba Equipment Discussions' started by CAPTAIN SINBAD, Jun 11, 2019.

  1. Diver0001

    Diver0001 Instructor, Scuba

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    Just speaking to the economics and leaving the politics to Facebook, there is a reason that so many products are manufactured in China. That reason is actually two fold: (1) because the Chinese have access to a vast resource of cheap labour, which is no longer the case in the USA or Europe and (2) They have a tremendous amount of manufacturing know-how, including how to "scale up" quickly and efficiently, which is no longer the case in the USA or Europe.

    I wouldn't say that China is "unique" in their ability to manufacture but the combination of factors in their favour makes it able to manufacture qualitatively good products more cheaply than most other countries. This is a golden formula for success. There is a very good reason that your iPhone, your TV, your camera and a million other products are made in China. It about efficient economics.

    It is, therefore, no surprise that a lot of diving gear is also made in China.

    The question Sinbad poses is whether or not the current "trade war" will affect scuba diving. I think it clearly will but the extent will be limited.

    Gear purchased in the USA may become more expensive because tariffs will likely be passed down to the consumer. Trump has said that tariffs could be up to 25% so expect dive gear purchased in the USA to go up in price by a maximum of 25% (probably less). That's the short term. In terms of economics the beneficiaries could be to American and European manufacturers that still manufacture their gear domestically. I know in Europe that there are still a few. I don't know about the market in the USA. In any case their gear has traditionally been very expensive relative to Chinese goods but the tariffs will help them to some extent by making their products relatively less expensive than they would be in a free market situation.

    This works differently in the case of diving gear than it does, for example, in the case of steel. Tariffs on steel are damaging to the domestic economy because steel is not a consumer product; it is an intermediate product that is used to manufacture consumer products. In the case of steel tariffs, the damage to the domestic economy is significant and wide spread. In the case of end user consumer products,it is relatively less damaging to the domestic market because people can simply choose to not buy diving gear. (with respect to products containing steel this is not always the case).

    An increase in the price of diving gear will primarily affect the USA. What we should expect to see based on "supply and demand" is that there will be less demand for scuba products and training than there was in the past. The reasons for this are also two fold: (1) the tariffs on intermediate products like steel will ultimately trigger a recession in the American economy and scuba is a "luxury" that suffers badly during economic recessions and (2) entry into the activity will become somewhat more expensive, which means that even people who would have taken scuba lessons in a recession may not have the money to do so. These are basic market mechanics.

    Will it be earth shaking? Probably not. I'm going to guess that the effect on the industry will be considerably less than the effect of the tsunami in 2004. What I *do* think may happen is that the existing anti-American sentiment internationally may become exacerbated by what many see as the current administration's bullying (some even call it "economic terrorism") and that American tourists may face increased risks of violent repercussions by those who fail to understand that individual Americans are not personally accountable for the actions of the American government. If I were an American I would be very mindful of this risk at the current time.
     
  2. Eric Sedletzky

    Eric Sedletzky Great White

    # of Dives: 500 - 999
    Location: Santa Rosa, CA
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    Interesting you mention steel.
    Just as a side note, I specify domestic USA made stainless steel for all my products.
    I also do a lot of fabrication/welding work with regular mild steel. Almost all steel in supply yards here comes from China. The exception would be something like architectural Corten steel which is a special alloy that they use uncoated for rust patina effects outdoors. It corrodes only so much then stops once it gets a surface layer of oxidation. It’s also at least twice or three times the price. American alloyed steel products including stainless are verified. There is no verification with Chinese metals and they can do what they want. USA mild steel used to be at least 60,000 tsi at a minimum. This Chinese garbage we get, in some cases is down to 45,000 tsi, most is in the 50’s somewhere. Nobody knows what kind of contaminants are in it. Most of it is recycled and unverified.
    Some of it is so bad it’s almost un-weldable. It’s almost like cast iron or pot metal. Chinese steel can foam up and start to burn trying to TIG weld it. I have to use stainless filler rod just to complete welds sometimes. They also are not full measurements. Everything seems to be about 1/16” short. A two inch wide piece of flat bar will be 1-15/16”. Take a 1” wide piece of steel and after 16 produced pieces they get an extra piece. Combine that by millions of pieces and that’s a lot of free steel.
    Basically we’re getting screwed by China and they’re laughing about it.
    Pretty scary when you consider all our future infrastructure will depend on Chinese crap steel.
    Just look at all the problems they had with the SF Bay Bridge when it was redone.
     
    Bob DBF and couv like this.
  3. chillyinCanada

    chillyinCanada Solo Diver Staff Member

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    Buy Canadian. :wink:
     
  4. LandonL

    LandonL ScubaBoard Supporter ScubaBoard Supporter

    # of Dives: I just don't log dives
    Location: Fort Lauderdale, FL
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    Most neoprene products available now are made outside of China, as are all regulators. Many BCDs are made in China, but there are other sources. Same for masks and fins.
     
  5. Chidiver1

    Chidiver1 Barracuda

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    I blame this thread for buying 3 pieces of gear in 1 week. :no::banghead:
     
  6. chillyinCanada

    chillyinCanada Solo Diver Staff Member

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    Come on now . . .you know it wasn't this thread. :p:p
     
  7. eelnoraa

    eelnoraa DIR Practitioner

    # of Dives: 100 - 199
    Location: San Francisco Bay Area
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    Only 3 pieces in 1 week?? I have seen much worse
     
    chillyinCanada likes this.
  8. Eric Sedletzky

    Eric Sedletzky Great White

    # of Dives: 500 - 999
    Location: Santa Rosa, CA
    3,785
    3,543
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    Freedom plates and VDH wings are made in USA.
    The webbing and other soft materials I’m not so sure.
     
    Soloist and couv like this.
  9. eelnoraa

    eelnoraa DIR Practitioner

    # of Dives: 100 - 199
    Location: San Francisco Bay Area
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    You sure about VDH wing?
     
  10. runsongas

    runsongas Great White

    # of Dives: 500 - 999
    Location: California - Bay Area
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    quite a few wings are made in the US. zeagle was one of the few making more conventional bcds though.
     

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